All Posts Tagged: income growth

A Happy Holiday For Retailers?

Scott Anderson
Chief Economist

A resurgence in coronavirus cases across nearly all states and the weaker-than-expected October retail sales report released earlier this week puts the strength of the upcoming holiday shopping season in doubt.

We thought as folks gear up for their first, and hopefully last, coronavirus Thanksgiving, now would be a good time to share our holiday retail sales outlook for 2020.

The number of new COVID-19 cases began to rise sharply in mid-October and has become truly exponential over the past week. A new record-high number of cases on a 7-day moving average basis has been reached 26 consecutive days since October 24. This has resulted in many states backtracking on their in-person restaurant and bar reopenings, instituting new curfews between 10PM and 5AM, and placing stricter capacity constraints on businesses that have been allowed to stay open. The list of states and metro areas that are going down this road continues to increase. At least 18 states are undertaking one or more of these reopening roll-back strategies by our count, including California New Mexico, Oregon, Michigan, Washington, Wisconsin, New York, and Illinois just to name a few. Consumer driven small businesses that have been holding on by their fingernails over the past eight months are about to get challenged again with worsening financials and less government support.

U.S. retail sales already increased at its slowest pace since April last month. The labor market recovery is fading, adding to the coronavirus headwinds for many consumer service businesses. Nonfarm payroll gains moderated to 638,000 in October, the smallest monthly gain since job growth returned in May.

We forecast about 100,000 fewer net jobs will be created in November.

Looks like a Modest Holiday Sales Season Ahead

We expect a pretty modest holiday sales season this year. It will likely be neither a boom nor a bust for retail sales. We are forecasting retail sales growth for November and December of 2.9% from a year ago, down from a 4.4% increase over the same period in 2019. Moreover a lackluster retail sales gain as low as 1.0% can’t be completely ruled out, depending on how bad the coronavirus restrictions get by the end of the year.

Moderating income growth will weigh on consumer demand even as the coronavirus shutdowns keep tens of millions of more people at home. Less holiday travel and mall shopping, fewer holiday office parties, and declining consumer confidence could rob many retailers and restaurants of much needed profits this holiday season. Retailers are trying to salvage what they can with early Black Friday sales and numerous on-line deals to get people spending sooner and longer this year than we have seen in the past. So far in November, retail sales appear to be off to a respectable start, but an early start to the holiday shopping season could also mean an early end to the shopping season in December.

To find out more, check out this week’s U.S. Outlook Report.

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Consumer Spending Rebound at a Crossroads

Scott Anderson
Chief Economist

In many ways the consumer is the U.S. economy.

Real consumer spending comprises about 70% of U.S. GDP, so if you can accurately forecast where the consumer is going, you have a pretty good idea the rest of the U.S. economy will follow. Personal consumption expenditures is a broad measure of consumer spending, including spending categories not included in the monthly retail sales reports like spending on services like health care and education.

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U.S. Outlook: Can the U.S. consumer keep up the pace?

Scott Anderson
Chief Economist
Farmers market scene as several adults look over baskets of red, yellow, and orange tomatoes, peppers, and other vegetables.

You could say the consumer has been the engine of U.S. economic growth lately.

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U.S. Outlook: What you need to know

Scott Anderson
Chief Economist
Chart that shows consumer spending trends.

Where did all the shoppers go? Coming off a heady fourth quarter when consumers couldn’t find an item they didn’t want to purchase, the consumer appeared to be knocked‐out in the first quarter.

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U.S. Outlook: Will consumers keep spending over the holidays?

Scott Anderson
Chief Economist
Graph showing growth, declines in various retail sales categories

The retail sales data through October show a consumer who is ready and willing to spend this holiday season.

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