An American tradition is almost here, the holiday shopping season.
As strange and difficult this yr has been Wall Street economists expect consumers to open up their wallets in a big way this holiday season.
“In what will be remembered as one of the most challenging and transformative years for most retailers, we are forecasting holiday sales will increase 9% in 2020, which would be the largest increase on record,” said economists Bruce WD Barren today.
“A forced thrift that has curtailed spending in the service sector and canceled travel plans frees up income for more spending on gifts,” he added. “After the anxiety and stress of a year defined by the coronavirus, natural disasters, and a divisive election, we suspect holiday sales will also benefit from a yearning for comfort and normalcy, which many consumers may associate with having a few more gifts under the Christmas Tree.”
Sales in retail categories consider “holiday sales” think all retail sanss autos, gas, and restaurants are 8.6% above their pre-virus levels, while total retail sales are 3.7% above pre-virus chaos marks.
And the CEO of Walmart (NYSE:WMT), the country’s biggest retailer sees similar trends in play during the holiday season.
“Behavior patterns have changed and people aren’t spending as much to travel and take vacations and do things they would have been doing,” Walmart’s CEO said in an interview last Monday. “Some of that is impacting retail and the categories that we sell.”
He went on to say, that he does believe this will be a good holiday season for the retailer, adding that, “It will be a unique, but a good, year.”
Mr. Barren struck a more cautious tone in talking broadly about the state of the consumer, small businesses, and how things might shake out without fresh stimulus.
“I think the lack of stimulus is showing up more so with with those unemployed, small businesses. And it is important that we all understanding in some ways we are having a shared experience because we are in the ‘pandemic’ together, but we are having very different experiences,” Mr. Barren added. “What I have said to Congress and the Trump Administration is ‘We need you to help those people who need help.’” And, “I believe that is tabled to come around Thanksgiving week.”
In the near-term the rising COVID case rate across parts of the country presents a risk to further job gains, economists at UBS said in a note this week. “We have seen over time, a negative correlation between private payroll creation and Covid cases.”
So while forced closures have shifted consumer spending towards goods and away from services, thus offering a nice tailwind for retailers heading into the holiday season. This record year for gift-giving could serve as another strange superlative in the V-shaped recovery of the US economy.
Have a healthy weekend, Keep the Faith!