The economy has seen a slow recovery over the last few years, but U.S. holiday spending sales are still expected to gain a 4.1 percent increase, the highest jump in the last three years, according to a Tuesday forecast by the National Retail Federation. ON average, holiday sales have grown only 2.9 percent annually over the past 10 years.
Despite consumer confidence being lethargic through most of the year, it will likely pick up in November and December as Americans begin to cautiously spend for the holiday season. “It goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions,” NRF president Matthew Shay, said. “The lagging economic recovery, though improving, is still top of mind for many Americans.”
Steady employment gains are giving more consumers confidence to buy gifts this holiday season and helping others feel more secure in their jobs to spend more. At the same time, sluggish wage growth has kept many shoppers on a constant hunt for markdowns and that could cause retailers to offer deep discounts, similar to what was seen last year when the government shutdown and severe weather forced shoppers to stay at home.
“Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time. Retailers will respond by differentiating themselves and touting price, value and exclusivity,” Shay said.
Some consumers have decided to start early to secure the beset prices. Gena Shelton, a 34 year old mother of one who lives in Ohio, said she is about a third of the way done with her holiday shopping. After buying a house this year, she plans to keep her holiday budget the same or even smaller than last year.
“The ability for consumers to spend is there,” Jack Klienhenz, chief economist at the NRF, said in an interview. “Retailers have conditioned consumers into looking for bargains. There are a lot of concerns out there, but putting those aside, if we don’t have any unusual factors last year, it’s going to be a solid year.”
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