Retail groups predict growth in spending this holiday season, although momentum may not be as strong as last year. It’s a different story for online retail spending, which is expected to soar 17 per cent from last year’s levels, according to a comScore forecast.
Early estimates of Black Friday show traffic levels at stores were “decent but not eye-opening,” according to Retail Metrics Inc. Many people are migrating to online shopping, with IBM reporting an 18-per-cent jump in sales on Thanksgiving Day.
Doris Edwards is optimistic about the economic outlook. “We’ve been in a slump, and now we’re coming out of it. It just takes time,” says the 41-year-old health care office manager at Walden Galleria mall in Cheektowaga, N.Y.
But while she feels more than ready to go home by 11 a.m., Ms. Edwards says this is how she will do all of her Christmas shopping – in store. She has no interest in online shopping. She likes to see and touch the products before she buys them.
Gasoline prices are another source of relief. Prices at the pump have subsided 12.3 per cent since mid-September, easing pressure on the pocketbooks of U.S. consumers. Nowhere is the better mood about jobs and housing more evident than in auto sales. New car and truck sales are well above last year’s levels – with October showing 7-per-cent growth from last fall – buoyed also by low borrowing costs and the need to replace aging vehicles.
While the stock market has wobbled in recent weeks, the benchmark Dow Jones industrial average is 16 per cent higher than a year ago.
The best way to characterize American consumers these days is “segmentation,” says Michael Silverstein, senior partner at Boston Consulting Group in Chicago. A fifth of the population enjoys prosperity and recovery, another 20 per cent are “suffering badly,” and the rest are in the middle – still financially bruised, with modest savings. “They have many more wants than they have money,” he says. “For them, life is still tough.”
Challenges still abound. The jobs market is still nowhere near its pre-recession levels, and the number of long-term unemployed people is still dizzingly high. Incomes haven’t improved much – which means the spending they have done is eating away at savings (the savings rate has fallen to 3.3 per cent from 3.7 per cent).
Many of the economy’s new jobs have been in lower-wage positions, and millions of Americans are toiling in part-time positions when they’d prefer full-time work.
The big question mark is the fiscal cliff, that looming $600-billion combination of tax increases and spending cuts that could strangle the U.S. economy next year. Estimates vary over its impact on growth. But while the risk remains, “we see it as a fiscal curb rather than cliff,” says RBC’s Mr. Wright.
Compared with the dark days of 2009, the sisters in Washington aren’t frightened by the fiscal cliff.
With home values on the rise, Ms. Hind sees better days ahead for herself, her sister and her country. “It’s awesome,” Ms. Hind says, before heading into another store.
In the pre-dawn fluorescence of the Target store in Tonawanda, N.Y., Devonte Hubbard rolls up the camping chair he has been slumped in, waiting to save $500 on a 50-inch Samsung television.
“It’s four o’clock! Let’s get our TV,” Cleveland Jones says to his boyfriend, who has been stoically waiting by his side through the night.
Both men say they are feeling more confident this year as the economy slowly gets back on track. Now that the housing market is looking up again, the two are looking to buy a house together, likely within three years.
“It does seem better than it was a few years ago, as far as not being in a recession,” says Mr. Hubbard, a FedEx worker. “People are buying more, and spending more. A lot of people are better off financially than a couple years ago. Is there still room for improvement? Yes … It’s a work in progress.”