Holiday Spending Forecasts Look Strong

The U.S. economic machine, particularly on the retail side, may be seeing some reasons to smile again. Rises in employment are improving Americans’ ability to spend, and that means people can get beyond just basic needs and begin discretionary spending again. That’s music to retailers’ ears.

Purchasing behavior has jumped over 4 percent, bringing in $617 billion in winter 2013, which is a huge improvement over previous years. This is a climb over 2012’s 3.1 percent growth, and it’s also higher than the 10-year average growth trend of 2.9 percent.

Going Forward with Growth

The economic pattern is expected to keep increasing into 2014 and 2015. Steady rises in employment are contributing greatly to consumers’ wallets and their ability to get into stores and buy. The increase in income is taking the stress off their minds and allowing folks to think about improving their lives. That boosts the retail spending that businesses and industry want to see, purchases of durables and higher-end products such as appliances and electronics.

Another trend that is showing increased spending is occurring is the drop in offers and coupons being offered by big-box retailers like Walmart and Target. With business growing, the need for low-price offers is tapering off. That means a reduction in sales so that retail gross revenue can be maximized with the growing buying trend. The markups are not dramatic though. Retailers know that anyone who gets ahead of the pack a bit can be easily undercut, so competition is still keeping retail pricing in control.

Looking over the Shoulder for What’s Behind

The above said, uneven growth still has retailers and industry wary. The jobless rate seems to sputter and move, reminding people that recoveries can retrench on a dime, causing sudden drops in spending quickly. On the other hand, the U.S. retail industry is expecting a boost in temporary hiring of 800,000 workers to deal with the upcoming holiday season, so the bets are in that 2014 will produce expected revenues again. However, given the two factors of labor rates and temp help demand, retailers can’t be blamed for trying to be nimble and not over-committed.