Those who gaze into the crystal ball for retailers are bullish about holiday retail sales prospects. Predictions range from 8.5%-to-10.5% increase over last year. Either number would top last year’s increase of 8.2%.
“There are several factors coming together to have a major impact on the holiday outlook, but household fundamentals are a bright spot in the uncertain present,” Chief Economist for the National Retail Federation Jack Kleinhenz said. “Consumers are in a very favorable position going into the last months of the year and are spending because they can.” (source)
He’s referring to the fact that COVID-19 shutdowns saw many people working from home and “Zoom Meetings” becoming household words. That meant many people were not spending as much on gasoline, eating out and office apparel. As a result, those who were able to work have been collecting extra cash and the holidays are the ideal time to spend that money.
For business owners, multiple programs such as SBA disaster loans and PPP (Paycheck Protection Program) loans, which were often forgiven so they turned into grants, made it so many employees continued to be paid, even if the business had reduced revenue.
Nationwide, consumers have accumulated a “savings buffer” of about $2.5 trillion because their expenses were reduced by the changed working conditions. In addition, the labor shortage has put upward pressure on wages as businesses compete for talent, so some people are making more money.
Of course some people weren’t able to work at all during the pandemic, but their pain was eased somewhat by unemployment benefits, stimulus checks from the Federal government and the new child tax credit. Those who were still working benefitted from the last two government programs, giving them more disposable income.
