Retail experts have been predicting for months that the 2011 Christmas season will not provide nearly as large of an increase in sales as 2010 did, but Wells Fargo economists say optimism for this year’s season doesn’t need to be quite so restrained.
The National Retail Federation reported an estimated year-over-year sales gain of 2.8 percent. Wells Fargo, with offices in Madison, on the other hand, is reporting a holiday season anticipated to grow 5.2 percent.
Senior economist Mark Vitner said the difference in estimates comes from when the data for the estimates was gathered.
“I think what may have led to those lower numbers is that they were probably put together back in August, when things were looking gloomier,” Vitner said. Retailers “really don’t need much of an increase in sales in November or December to get to that 5.2 percent,” because spending has already been strong this year, he said.
Vitner said one of underlying reasons for steady growth this year has been inflation and higher prices, especially for raw materials like cotton. Home electronics prices have traditionally declined year-over-year, but popular items like tablets and smartphones are not dropping as fast as usual, either.
Another reason for confidence in the holiday season according to Vinter is the anticipated increase in consumer credit use.
“A lot of consumers have worked down their credit card balances to the point that they’re now willing to take on a little bit more debt, particularly for the holidays,” Vinter said. “We’ve seen sporadic increases in consumer borrowing, and the terms on credit cards have gotten better for some.”
Vinter said while no one is expecting a dramatic increase in consumer credit card use, the change “actually moves us back in the direction of normal.”