U.S. retail sales this holiday season may grow at a faster pace than last year, fueled by rising wages and a stronger job market, the National Retail Federation said.
Consumer purchases may increase 3.6 percent to a $655.8 billion in November and December, excluding autos, gasoline and restaurant sales, the Washington-based NRF said in a statement Tuesday. Sales climbed 3 percent last year, and the seven-year average since the recession ended in 2009 is 3.4 percent, the group said.
U.S. shoppers may be feeling more holiday spirit, with the unemployment rate holding at an eight-year low and bigger paychecks putting more money in shoppers’ wallets. There are signs that consumers already are loosening their purse strings: The U.S. personal savings rate fell to 5.7 percent of disposable personal income in August, down from 6.2 percent in March, according to the Commerce Department.
Still, weak mall traffic may force traditional retailers to work hard over the holidays to entice customers.
“All of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season,” NRF Chief Executive Officer Matthew Shay said in the statement.
The NRF’s holiday sales estimate was lower than a projection from Deloitte, which said last month that sales in stores may increase as much as 4 percent. A separate survey of about 1,000 U.S. consumers by AlixPartners indicated that 83 percent of shoppers expect to spend about the same or more this holiday season.
In preparation for the holiday rush, retailers are making their annual push for seasonal workers. Target and Kohl’s have said they plan to hire the same number of temporary employees as last year, with both adding about 70,000 apiece. Macy’s, meanwhile, is hiring 83,000 holiday workers, down about 2,000 from last year.
Political uncertainty abroad and at home, as well as the chance of unseasonably warm weather, are the biggest threats that could restrain holiday spending, NRF Chief Economist Jack Kleinhenz said in the statement. Still, the strong U.S. economy is likely to fuel shoppers this season.
“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” Kleinhenz said.