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Tuesday, March 19, 2024
March 19, 2024

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Holiday spending expected to rise 3.7%

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NEW YORK — Americans are expected to spend at a slower pace than last year during the crucial winter holidays, weighed down by sluggish wage growth and other factors, according to the nation’s largest retail industry trade group.

The National Retail Federation, based in Washington, D.C., predicts holiday spending will be up 3.7 percent to $630.5 billion, slower than the 4.1 percent increase during last year’s November-December period.

That would mark the first slowdown since 2011 when holiday sales were up 4.6 percent, down from 5.2 percent in 2010. During that time, retailers were not only hurt by high unemployment but a mild winter that forced stores to heavily discount coats, sweaters and other cold-weather items more than expected.

The dollar figure excludes sales from autos, gas and restaurants but includes online spending. The group estimates that online spending should be up 6 percent to 8 percent for the two-month period to as much as $105 billion. That would be in line with the 5.8 percent increase over last year’s holiday season.

Still, the holiday sales estimate is much higher than the 10-year average of 2.5 percent. But the growth has been choppy since the deep downturn of 2008 when holiday sales fell 4.6 percent from the previous year.

“While economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend,” said Matthew Shay, CEO and president of the National Retail Federation in a release. “The fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now.”

The estimate is a barometer for retailers that depend on the last two months of the year, which on average, account for nearly 20 percent of annual retail industry sales. The figure also offers some insight into the mindset of the consumers, which make up to 70 percent of economic activity.

Shoppers are faced with mixed messages. The U.S. economy looks healthy. In fact, economic growth is at a 3.9 percent annual rate from April through June, and unemployment has dropped to a seven year low of 5.1 percent. And consumer confidence in September is the highest since January.

But investor concerns about an economic slowdown in China, the world’s second largest economy, and other emerging markets have caused turmoil in the financial markets. And the September job report issued last Friday that shows U.S. employers cut back sharply on hiring raises concern that the U.S. economy is weakening. Moreover, analysts say the only reason why the unemployment rate remains at 5.1 percent is because many Americans have stopped looking for work and are no longer counted as unemployed. And Americans are struggling with sluggish wage growth. Hourly wages are up 2.2 percent in the past year.

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