AIER Forecasts a Happy Holiday Spending Season

The American Institute for Economic Research is projecting a robust holiday spending season this year, with a good chance to post the strongest gains since the Great Recession.

In its new November edition of Business Conditions Monthly, AIER’s bird’s-eye look at the state of the economy, AIER researchers say strengthening economic fundamentals should form the foundation of a strong holiday spending season for consumers. AIER projects an increase in the range of 4 to 5 percent or possibly higher in holiday retail sales gains, when measured from fourth quarter to fourth quarter.

That’s based on an improving job market and better balance sheets for consumers, said Bob Hughes, senior research fellow at AIER. An improving consumer sentiment also reflects lower gas prices, as well stock market back from the lows of a few months ago. Unemployment is at 5 percent, the U.S. added 2.8 million jobs over the last 12 months, and wages are rising a little faster, which should also boost consumer spending, Hughes said.

Although retail sales numbers released last week appeared soft, Hughes said that was due to lower gas prices, and an unimpressive dollar value of auto sales. But unit auto sales were strong, and that’s a better measure, he said.

“We think consumers are actually in good shape,” Hughes said.

To read this month’s Business Conditions Monthly, click here.

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