Will Superstorm Sandy rain on an improving economy?
Americans spent briskly in October before Sandy hit the Northeast. Will they continue to do so during the busy holiday shopping season?
The International Council of Shopping Centers said last week that retail sales increased 5 percent at stores open at least a year in October.
Michael Niemira, chief economist at the international shopping center trade group, said the sales reports give reason to be optimistic, however, there still are "considerable uncertainties."
"We'll see any negative impact from Sandy in coming weeks," he said.
In another report last week, the Conference Board said its consumer confidence index increased in October to 72.2. That's up from 70.3 in September and the highest reading since February 2008.
Consumer spending drives nearly 70 percent of the nation's economic activity. And holiday sales can make up to 40 percent of annual retail sales.
The National Retail Federation predicts holiday sales this year will increase 4.1 percent to $586.1 billion. Actual holiday sales in 2011 grew 5.6 percent.
"We believe we’ll see solid holiday sales growth this year,” said NRF President and CEO Matthew Shay. “Variables including an upcoming presidential election, confusion surrounding the ‘fiscal cliff’ and concern relating to future economic growth could all combine to affect consumers’ spending plans, but overall we are optimistic that retailers' promotions will hit the right chord with holiday shoppers.”
NRF’s holiday sales forecast is based on an economic model using several indicators including consumer confidence, consumer credit, disposable personal income, and previous monthly retail sales releases. It now includes the non-store category, which factors in direct-to-consumer, kiosks and online sales.
Shop.org's 2012 online holiday sales forecast expects online sales to grow 12 percent over last holiday season to as much as $96 billion. The U.S. Department of Commerce estimates total 2011 fourth-quarter e-commerce sales increased 15 percent.
“Online retail has been a bright spot for years and we don’t expect that trend to change anytime soon, especially with the growth in mobile,” Shay said. “Aside from the convenience, shoppers look to the holiday season to take advantage of retailers’ increased digital offerings. In addition to enhancing the site experience, retailers have spent the year investing in optimizing their mobile and social platforms, just what holiday shoppers are looking for.”
According to NRF, retailers are expected to hire between 585,000 and 625,000 seasonal workers this holiday season, which is comparable to the 607,500 seasonal employees they hired last year.
“The retail industry creates hundreds of thousands of jobs every holiday season by adding new staff in stores, distribution centers, and customer service departments across the country. In addition to the newly created jobs, many retailers also offer existing staff the opportunity to work longer hours if they want,” Shay said. “New jobs help people support their families, and for some, seasonal employment can turn into a career opportunity once the holidays have passed.”
According to the NRF, the retail industry includes more than 3.6 million establishments, which directly and indirectly accounts for 42 million jobs – one in four U.S. jobs. The total U.S. GDP impact of retail is $2.5 trillion annually.
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