By Harriet Torry
The coronavirus pandemic is creating novel hurdles for
Americans' spending this holiday season, posing potential
challenges for an economy that leans heavily on their willingness
Households face the prospect of Halloween without trick or
treaters, Thanksgiving without family travels, Black Friday without
crowds, and a December without parties and in-person gift-giving.
Congressional deadlock over fresh fiscal aid for the millions
unemployed and a contentious presidential election campaign are
also potential dampers on this year's cheer.
Holiday sales -- usually spanning November and December --
represent roughly 20% of annual U.S. retail sales each year,
according to the National Retail Federation. And retail spending
accounts for about 25% of consumer spending in a typical year.
A number of economists are predicting little growth or none
whatsoever this year compared with 2019. RSM US chief economist Joe
Brusuelas expects retail sales to increase just 0.5% this holiday
season -- partly because Congress hasn't passed a new stimulus
Sucharita Kodali, a retail-industry analyst at Forrester
Research Inc., expects retail spending this holiday season to be
flat compared with 2019. Though she predicts online sales will grow
20% to 25%, the sharp decrease in foot traffic at bricks-and-mortar
stores is expected to keep overall spending in check this November
and December. Given coronavirus constraints, "there's not going to
be as much Halloween spending this year," either, she said.
This year's outlook is so unpredictable that some forecasters
aren't even making predictions. The National Retail Federation has
delayed the release of its holiday forecast for the first time in
decades, citing a lack of clear economic indicators and other
variables, including the presidential election and a possible
resurgence of Covid-19, the illness caused by the new
The NRF said holiday sales -- which exclude purchases at
automobile dealers, gasoline stations and restaurants -- rose 4.1%
in 2019 over the previous year, after increasing 2.1% in 2018.
Still, some economists see reasons for optimism. Households,
particularly the middle-income and affluent, have paid down debt
and boosted their savings, giving them a financial cushion.
Deposits at commercial banks jumped to a seasonally adjusted $15.72
trillion in September from $13.39 trillion in February, according
to the Federal Reserve.
"That's money that people were earning and not spending on
dining and travel," said Calvin Schnure, senior economist at
Nareit, a trade group that represents real-estate investment
trusts. "We've never seen this kind of increase in a recession --
usually household finances weaken; this is really different and
shows there's a lot of spending power in the economy," he said.
Mr. Schnure expects 5% year-over-year growth in retail sales
this holiday season based on the fact that consumers are saving by
"having dinner at home instead of going to restaurants and watching
Netflix instead of going to the movies once a week."
James Bohnaker, an economist at forecasting firm IHS Markit, is
also predicting 5% year-over-year growth in holiday retail sales,
and he is expecting some kind of further fiscal stimulus to come
before the end of the year that will help prompt holiday
gift-giving. Mr. Bohnaker noted that the holiday spending season,
which usually runs from Thanksgiving through the end of the year,
is "creeping earlier; it seems things are kind of in full swing
Retailers are pushing an earlier start to the holiday season,
both to limit crowds at stores and to ease pressure on supply
chains by avoiding preholiday-order bottlenecks.
Spending on goods has been a bright spot for the economy
recently, as consumers prepared for further months of working and
studying from home by spending on vehicles, home improvement and
sporting goods. Retail sales, a measure of purchases at stores,
restaurants and online, rose a seasonally adjusted 1.9% in
September from the previous month, the Commerce Department said
Christmas Decor, a decorating franchise in Irving, Texas,
expects a strong holiday season, as people working from home are
saving money and want to brighten their houses, said Brandon
Stephens, president. "A lot of people are focusing on the home,
family, looking for something that makes them feel hopeful," he
In the long term, economists say, consumers can only keep
spending if they are earning. This means the postholiday outlook
will depend on job growth, which slowed sharply in recent months as
more layoffs turned permanent.
This year's muted retail expectations are being reflected in
weak holiday hiring. Seasonal job postings this year are 11% below
last year, job site Indeed said this month.
The pandemic also is changing the nature of seasonal holiday
work. The share of job openings related to filling online orders is
up threefold compared with previous years due to the increase in
Mathieu Stevenson, chief executive officer of Snagajob, an
online platform for hourly work, said bricks-and-mortar stores are
creating new roles, like sanitization associates who wipe down
shopping carts between uses, temperature takers and capacity
monitors who limit the number of shoppers allowed in and make sure
they keep distanced from each other.
Economists say it will take a lasting solution to the pandemic
and many more new jobs to keep the holiday cheer going after the
decorations come down.
Write to Harriet Torry at email@example.com
(END) Dow Jones Newswires
October 18, 2020 10:14 ET (14:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.