November Sales Gains Largest In Five Months
Consumers took advantage of holiday shopping opportunities in November; increasing sales suggest economy is slowly strengthening
November was a good month for retail. Despite the fact that the holiday shopping season was cut short by a later Thanksgiving, it would seem all the worrying was for naught: the Department of Commerce reports that retail sales rose 0.7 percent, the largest increase in five months.
According to the National Retail Foundation (NRF), sales increased by 3.9 percent unadjusted year-over-year, right in line with the 3.9 percent growth the NRF was predicting. As NRF president Matthew Shay says, “Consumers took advantage of a very promotional holiday season to shop at their favorite retailers during the Thanksgiving weekend. Consumer confidence and sentiment are steadily improving, but spending remains at a modest pace. While it confirms that the economy is improving, the future remains far from certain.” Shay’s uncertainty in particular seems to stem from lawmaker’s inability to settle their differences in October, which led to a government shutdown. The NRF continues to urge lawmakers to do everything in their power to compromise in an effort to avoid a repeat of October and to “provide businesses and retailers the confidence and certainty they need to hire workers and make strategic investment decisions.”
NRF chief economist Jack Kleinhenz points to the resilience of the consumer this holiday season, saying that, while it is still a challenging and highly competitive season for retailers, “consumers have demonstrated their ability to drive the economy forward. Today’s sales report bodes well for a solid holiday sales season, and may provide the foundation for accelerating growth and momentum in the New Year.”
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Because of the shortened holiday season this year, many retailers increased promotions and offered deals well in advance of Black Friday weekend throughout November, meaning there were more opportunities for consumers to go out and release their “pent-up purchasing power,” as Kleinhenz calls it. Indeed, throughout November, sales of automobiles, appliances, electronics, sporting goods, and furniture/home furnishings all increased. Economists are attributing November’s sales success to steadily increasing incomes, lowering gas prices, and employment gains. According to Reuters, though jobless claims surged last week, these “ever- volatile” claims fell throughout the majority of November, and the unemployment rate decreased to 7.0 in November — the lowest it’s been in five years.
Overall, economists are looking at November sales as a sign of a strengthening economy, with the hope that these increasing gains will give the Federal Reserve a bit more confidence and eventually, encourage it to cut back on its monetary stimulus.
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