The National Retail Federation forecast that November and December’s U.S. sales will rise 5.7% over last year, to $217.4 billion, making it the best holiday showing since 1999, when general merchandise sales in the two-month period climbed 8.2%.
Last year at this time the Washington, D.C.-based group forecast that holiday sales would grow 4%, but in actuality they increased 2.2%.
“After several strong months of retail sales growth, it seems clear that the economy is picking up momentum just in time for the holidays,” said NRF Chief Economist Rosalind Wells. “Retail sales gains for the 2003 holiday season will be far better than the meager increases retailers experienced a year ago.”
Wells cites a variety of factors for this holiday’s substantial sales increase, including low interest rates, low inflation, rising equity markets, and mounting consumer confidence. Also, she said, consumers have more disposable income resulting from the withholding tax cut and child tax credit checks.
Additionally, business spending is a major factor contributing to this year’s holiday forecast, Wells said. Retail spending by businesses on equipment and software jumped 8% at an annual rate in the second quarter following an extended period of weakness going back to 2000.
Wells said several nagging factors affecting sales growth include a sluggish job market, rising energy costs, and ever-present geopolitical concerns.
“Consumers have spent the last several years on an emotional and economic roller coaster,” said NRF President and CEO Tracy Mullin. “Now, Americans appear to be ready to shop and ready to spend, just in time for the biggest shopping season of the year.”
Last year, holiday retail sales made up 22.7% of total retail sales.
Full results and analysis for the first installment of the 2003 NRF Holiday Consumer Intentions & Actions Survey will be released on Tuesday, Oct. 21.