Retailers cheery on holiday sales

Retailers cheery on holiday sales
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Retailers are forecasting a cheery holiday sales season driven by a healthy job market and rising wages.

The National Retail Federation (NRF) said Tuesday that sales in November and December are expected to increase a solid 3.6 percent to $655.8 billion, at a faster pace than last year and significantly higher than the 10-year average of 2.5 percent.

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"All of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season,” NRF President and CEO Matthew Shay said.

“This year hasn’t been perfect, starting with a long summer and unseasonably warm fall, but our forecast reflects the very realistic steady momentum of the economy and industry expectations," Shay said.

Holiday sales in 2015 increased 3 percent over the previous year.

The forecast also eclipses the seven-year average of 3.4 percent since recovery began in 2009. The figures exclude autos, gas and restaurant sales.

Additionally, NRF is forecasting non-store sales to increase between 7 and 10 percent to as much as $117 billion.

Retailers are expected to hire between 640,000 and 690,000 seasonal workers, in line with last year’s 675,300 new holiday positions.

“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” said Jack Kleinhenz, chief economist for the NRF.

There are still several issues that could derail the rosy outlook. 

“Increased geopolitical uncertainty, the presidential election outcome and unseasonably warm weather are the main issues at play with the greatest potential to shake consumer confidence and impact shopping patterns," Kleinhenz said.

“However, the economic spending power of the consumer is resilient and it should never be underestimated.” he said.

NRF’s holiday sales forecast is based on an economic model using several indicators including, consumer credit, disposable personal income and previous monthly retail sales releases.