United States

Holiday spending off to a sizzling start

Data suggests best sales in a decade


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The holiday shopping season kicked off with a boom over the long Thanksgiving weekend. The most recent data showed that same-store retail sales were up 4.4 percent on a year-ago basis. Meanwhile, Cyber Monday sales are set to hit $6.59 billion, up 16.6 percent from a year ago.

This reflects the ongoing structural transformation in the retail sector away from brick and mortar stores toward the more dynamic online shopping environment. That $6.59 billion estimate is larger than the $5.03 billion spent over the Black Friday Thanksgiving weekend. The fact that foot traffic was down 1 percent during the Nov. 23-27 period compared with a year ago was a testament to that trend.

The data over the holiday weekend implies a run rate above our forecast of a 4.2 percent increase in holiday spending, which is very encouraging. U.S. household financial conditions have improved markedly since the Great Recession. Given the decline in the unemployment rate to 4.2 percent, and wage growth of 3.6 percent at a three-month average annualized pace, the condition of the American consumer is better than at any time in the past decade.

In our estimation, the improvement in employment, wages and overall spending during the past six months strongly suggests that the U.S. household has been quietly building momentum into the holiday season. The data over the post-Thanksgiving week confirms the underlying trend in household spending.

Moreover, we believe that the data grossly underestimates the true pace of holiday spending, both in terms of online outlays and in terms of understanding how experiential spending has now become a much bigger part of the holiday spending season. This will translate into the best holiday spending season in the current business cycle.

Holiday sales to increase 4.2 percent


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