Positive trend in retail sales

Positive trend in retail sales

December 23rd, 2011 in Opinion Times

Totals won't be available for a few weeks yet, but it appears that U.S. retail sales for the 2011 holiday period will be healthy if not spectacular for merchants in both traditional and online stores. That's positive news for businesses across the country. It's also another indication that the nation's economic outlook is improving, though that optimism must still be tempered by the financial concerns that still beset many consumers and the nation as a whole.

Sales have been robust enough to prompt those who track them to raise their forecasts. The National Retail Federation, for example, predicted in October that 2011 holiday sales would grow by 2.8 percent. Recently, it raised that forecast to 3.8 percent. Similarly, ShopperTrak, another prognosticator, has raised its original forecast of 3 percent growth to 3.7 percent. A week before Christmas, retail sales were on track to reach a healthy $469.1 billion this year, a figure that has to please retailers.

Still, there is a reason for concern. Sales in the few days before Christmas often account for about a fifth of holiday spending. If consumers shop and spend through Christmas Eve, the current positive trend in sales will continue. If consumers suddenly shut their wallets, the current season for retailers will not be as bright as it initially seemed. Any decline in traffic and spending now could lead to shortfalls to a costly decline in profits among merchants that earn the lion's share of their yearly income in the last couple of the months of the year.

The reported increase in sales, buoyed by an obvious willingness of consumers to spend, is another sign of the nation's financial resilience. Recent reports of increases in housing starts, of more hiring and of improvements in other economic indicators indicate that the U.S. economy continues to move, albeit slowly, from deep recession into a stage of recovery and beyond.

Political gridlock and continued concern about domestic and international financial markets and policies, to be sure, continue to worry many consumers enough to make them wary about spending. Such wariness is not good for the economy, since consumers directly and indirectly account for about 70 percent of all U.S. economic activity.

For the moment, though, 2011 holiday retail sales seem to be strong and forecasters are cautiously optimistic that post-holiday spending will continue to reflect a positive mindset on the part of consumers. If that proves to be true, both the marketplace and the economy should continue to gain positive momentum.