Consumers Rocking Around the Christmas Tree

Santa’s elves have a lot of work to do.

According to the WSJ, American consumers spent just over 4 percent more in November compared to last year, confirming earlier projections of robust sales during the holiday season and granting job-insurance to the North Pole’s toymakers.

Cold Outside, Warm in Stores

A report by the United States Census Bureau attributes the holidays’ economic optimism to a mittenful of factors, including labor market gains, rising wages, and optimistic consumer confidence. Combined with low gas prices, these factors may whip up the strongest Christmas-season spending since the 2008 recession.

For the first time ever, U.S. retail sales could top $1 trillion during the holiday season, according to November estimates by research firm eMarketer. Online sales are expected to grow by 17 percent to $124 billion. In-store purchases, which still account for the vast majority of holiday shopping, will grow at a more modest 4.4 percent to nearly $880 billion.

A Lump of Coal 

Not everyone’s spirits are merry and bright, however. Retail stock prices have been generally turbulent, tumbling in spite of strong spending estimates, then bouncing back, only for some to fall again. Many retailers have reportedly struggled to pass on rising costs to customers, taking a hit in profit margins as they compete for market share.

A WSJ headline on Black Friday summarizes the situation nicely: “Retail Stores Win Back Shoppers, Not Profits.”

Happy New Year? 

In more cheerful news, even as they spend more this Christmas, consumers look to be in good financial shape headed into the new year. Personal savings are up and household debt as a percentage of disposable income is declining. Even if the economy steers into choppy waters in 2019, evidence indicates that consumers are more prepared to weather financial storms than before either the 2008 or 2001 recessions.

That’s as good a reason as any to raise a glass of Wassail.

Image from Pexels.com

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