Good reasons for retail sales to be strong for this year’s holiday shopping season

Christine Chmura, Chmura Economics & Analytics

The holiday selling season is well underway.

It is an important time of year for retailers as holiday sales represents about 20% of the retail industry’s total sales.

Despite businesses having uncertainty over tariffs and seeing somewhat slower economic growth, consumer spending continues to expand at a 2.9% annualized pace in the third quarter, according to the latest gross domestic product report.

The strong consumer spending makes sense in light of the continued strong employment growth and increasing wages in October.

Personal income is up 4.9% over the 12 months ending in September, an increase of $880.5 billion.

American consumers like to spend, so much of that increase in income usually translates into purchases.

But will that result in more sales over the holidays than last year?

The National Retail Federation, the nation’s largest retail trade group, predicts holiday sales will increase between 3.8% and 4.2%, which translates into $727.9 billion to $730.7 billion.

The forecast, which excludes sales at automobile dealers, gas stations and restaurants, represents sales to be generated in November and December. Holiday sales saw an average increase of 3.7% during the last five years.

Global financial services firm Deloitte is looking for this year’s holiday sales to rise between 4.5% and 5% from November through January compared with the same period a year ago. They expect e-commerce sales to rise between 14% and 18%.

In its 34th annual survey of more than 4,000 respondents, Deloitte found that the average household expects to spend nearly $1,500 during the holidays. Three-fourths of the respondents say they are likely to spend the same or more than last year during the holiday season.

One concern for retailers this year is that there are six fewer shopping days between Thanksgiving and Dec. 25.

With such low unemployment rates in the nation and state, however, some retailers may be hard pressed to find the workers needed to serve all their customers.

Long lines and slow delivery times could put a damper on in-store sales while shifting more of the market share to e-commerce.

Christine Chmura is CEO and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640 or receive e-mail at chris@chmuraecon.com.