Holiday sales spark optimistic forecasts
Share with others:
With less than two weeks to go before Christmas, two of the nation's largest retail organizations are feeling more optimistic about the holiday shopping season.
The National Retail Federation on Tuesday raised its forecast for retail sales growth in November and December to 3.3 percent, up from a 2.3 percent projection issued in early October. Even at the lower level, spending was expected to hit about $447 billion during this critical season for merchants.
"The start to the holiday season has surpassed all expectations," said Matthew Shay, president and CEO of the Washington, D.C., organization, in a prepared statement. He noted that the nagging high jobless rate continues to be a concern, but said other economic indicators such as stock market gains and savings built up during the recession are encouraging.
If sales achieve the new target, it would be the best holiday sales season for retailers since 2005, when the federation calculated growth at 5.5 percent.
Meanwhile, the International Council of Shopping Centers revised its projections upwards as well. On Tuesday, the New York group said it is now looking for a gain of 3.5 percent to 4 percent in the two-month period, up from its previous forecast in the 3 percent to 3.5 percent range.
Although some observers caution that a Saturday Christmas could be a challenge for retailers and note that mid-December typically brings a spending lull, a recent consumer poll found their confidence -- if not exactly strong -- at the highest level in three years.
The Discover U.S. Spending Monitor's poll of 8,200 consumers in November found a third believe economic conditions are getting better, while 45 percent think things are getting worse. That's an improvement over the numbers seen in an October poll.
The Commerce Department reported Tuesday that retail sales jumped 0.8 percent in November.
It was the fifth straight monthly gain. Department stores led the way with a 2.8 percent gain, the biggest for this category since a 3 percent increase in November 2008.
Best Buy Co., which decided against discounting as deeply as retailers such as Wal-Mart Stores Inc., ended up paying for it. The largest U.S. electronics chain said its quarterly net income, covering a three-month period ending Nov. 27, fell more than expected as it lost sales of TVs and laptops to competitors. The Minneapolis-based chain also reduced its full-year outlook.
Consumer spending is closely watched because it accounts for 70 percent of total economic activity. A drop in retail sales in May and June had raised fears that the economy could be in danger of slipping back into recession.
The Associated Press contributed to this report.
First Published December 15, 2010 12:00 am