NEW YORK – U.S. retail sales this holiday season may rise the most three years as the improving employment picture gives more shoppers the means to splurge on gifts, the National Retail Federation said.
Purchases may advance 4.1 percent to $617 billion in November and December, the Washington-based NRF said Tuesday in a statement. The increase would top last year’s 3.1 percent gain and the 10-year average of 2.9 percent, the trade group said.
Steady employment gains are giving more consumers the wherewithal to buy presents this year and helping others feel secure enough in their jobs to spend more. Even so, stagnant wage growth has kept many shoppers reliant on markdowns and may prompt retailers to offer steep discounts, just like they did last year, when a government shutdown and extreme weather kept some consumers at home.
“The ability for consumers to spend is there,” Jack Kleinhenz, 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 like last year, it’s going to be a solid year.”
Online sales may rise as much as 11 percent to $105 billion in November and December, the NRF’s shop.org arm projected. That would be greater than the 8.6 percent sales growth last year.
Some consumers are starting early to get the best prices. Gena Shelton, 34, a mother of one who lives in Columbus, Ohio, said she’s almost a third of the way through her holiday shopping list already. Shelton bought a new house with her husband in May and said she plans to keep her gift budget the same or smaller than last year.
“The reason I’m shopping more ahead than I normally do is that I would like to spend less,” said Shelton, who looks for coupons and savings codes online to stretch her dollars. “They don’t know if you bought that Disney princess 70 percent off or for full price.”
Consumer spending, which accounts for almost 70 percent of the U.S. economy, has been seesawing in recent months as Americans grapple with sluggish wage growth. After adjusting for inflation, purchases climbed 0.5 percent in August, the biggest gain in five months, according to figures from the Commerce Department. That followed a 0.1 percent drop the prior month.
Big-ticket items such as automobiles have led the gains as low interest rates and discounts prompt households to replace older models. Cars and light trucks sold at an average 16.7 million annualized rate from July through September, the best performance for any quarter since the first three months of 2006, according to industry data.
While spending is climbing, uneven progress in the labor market is holding back a more pronounced rebound. The jobless rate fell to a six-year low of 5.9 percent in August as employers hired more workers than most economists forecast, the Labor Department reported last month.
The increase in jobs has so far failed to generate bigger pay increases as earnings per hour were little changed on average last month from August, the figures showed. Over the past 12 months, wages were up 2 percent, compared with a 3.1 percent increase in the year ended December 2007, when the last recession began.
This year’s back-to-school season, often seen as a harbinger for the holidays, was the slowest since the recession ended in 2009. Spending in the period rose 3.1 percent, missing a forecast for a 3.2 percent gain, according to research firm Customer Growth Partners LLC. Another sobering sign: Store traffic declined 4.2 percent in July and slipped an additional 4.7 percent in August, according to ShopperTrak, a Chicago-based research firm.