WASHINGTON – Americans look to be in the mood to shop this holiday season as their buying power gets a lift from more plentiful jobs and cheaper gasoline.
Consumers spent at the fastest pace in three months in October, snapping up everything from clothing and electronics to sporting goods and restaurant meals, a government report showed yesterday. Economists, surprised by the spending strength, said the momentum will carry into year-end.
“Consumers are marginally better off” compared with last year, said Thomas Simons, a money-market economist at Jefferies LLC in New York. “We have been adding more jobs, and while wages are somewhat flat, people who were earning nothing before are earning something now.”
Such resilience may mean the most dire predictions for the holiday-shopping season will be unfulfilled, providing relief to retailers Macy’s Inc. and Best Buy Co., which have warned they’ll discount merchandise to boost sales. Economists at Morgan Stanley and JPMorgan Chase & Co. are among those forecasting consumer spending will pick up from its weakest performance in more than two years, helping the economy grow even as companies reduce production to work off bloated inventories.
Retail sales rose 0.4 percent in October, the most in three months and representing gains in nine of 13 categories, figures from the Commerce Department showed yesterday. The median forecast of economists surveyed by Bloomberg projected a 0.1 percent advance.
“We find that the lead-up to the holiday shopping season is an important signal for how sales will go at that crucial time of year,” Peter D’Antonio, an economist at Citigroup Global Markets Inc. in New York, said in a research note. Based on his calculations, the increase for large retail chains was about 0.6 percent, the most since mid-2012.
“We think that rise, along with improved consumer fundamentals, indicate further gains later in the quarter,” D’Antonio said.
Sales of holiday-inclined merchandise, such as apparel, furniture and consumer electronics, will increase by 4.9 percent in 2013, according to West Palm Beach, Fla.-based FTI Consulting Inc. While the growth is average by historical standards, “we suspect most retailers will be pleased,” retail analysts led by Bob Duffy wrote in a Nov. 20 report.