Old man winter and the fat man in a big red suit are just around the corner.
With the United States economy bouncing around this year – starting off the year contracting before climbing back in the second quarter – many are wondering how holiday sales will perform this year? A new report suggests an optimistic forecast.
According to a new report from the National Retail Federation (NRF), the largest industry retail organization in the U.S., holiday sales are projected to increase 4.1 percent, a figure that is the highest in three years.
The significant boost in sales will likely be due to a rise in consumer confidence that is expected to enhance in the final two months of the year as they seek out discounts and reluctantly open up their wallets to purchase gifts and obtain the best deals possible. Furthermore, the forecast is a reflection on the influx of positive economic data, including an official unemployment rate dipping below six percent and a roaring stock market.
Online sales could soar by as much as 11 percent, up from eight percent last year.
In total, holiday sales could reach more than $616 billion this Christmas season (this does not include cars, gas and restaurants).
“It goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions,” said NRF President Matthew Shay in a statement Tuesday. “The lagging economic recovery, though improving, is still top of mind for many Americans.”
However, given the fact that wages are remaining stagnant, the housing market is still sluggish and millions of Americans are still working low wage, part-time jobs, other groups are seeing a less rosy holiday season.
A report published by PricewaterhouseCoopers and Strategy (PWC) on Tuesday predicted that consumers will be spending less money than the year prior. The organization forecast that household spending during the holidays will be $684 this year, down from last year’s $735.
The paucity of spending can be attributed to a demographic identified as the “survivalists,” a group of people that earn less than $50,000 per year and account for two-thirds of American shoppers.
“The spending divide among shoppers is widening, creating two distinct groups that we are tracking — survivalists and selectionists — and retailers must cater to both segments,” said Steven Barr, an associate at PwC’s U.S. retail and consumer practice, in a statement.
Nevertheless, the NRF argues that consumers are in a much better financial state than they were at the same time last year. “In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales,” noted NRF Chief Economist Jack Kleinhenz in a statement.
Retailers have already begun preparing for Christmas as many shoppers will notice stores showcasing decorations, trees, gift ideas and much more. Kmart released a YouTube video entitled “Merry Birthday,” in which it claimed that it wasn’t a Christmas commercial but promoted their layaway plan geared for those who have a big event in late December when you have a lot of gifts to purchase.
How much do you plan to spend this Christmas?