The National Retail Federation said this morning that it expects holiday retail sales to grow 4.1% to $617 billion. That would mark a substantial increase in the rate of growth over both the 3.1% growth seen in 2013 and the 2.9% ten year average.
November and December mark the most critical period of the year for retailers, though the focus is slightly overstated. This year for instance the period will account for just over 19% of retail industry's $3.2 trillion in total sales over what amounts to just 17% of the year.
Retail sales over the traditional holidays are overblown in terms of their economic importance to the retailers because too much emphasis is placed on November and December. We need to include October not because retailers are always pushing Christmas shopping forward but because we need to include Halloween.
Americans only spend 1% as much on on Halloween as Christmas but no holiday captures the true marginal willingness to spend better than this nod to pagan harvest festivals. When this country is feeling economically comfortable we spend money on stupid things. That’s not a knock. It’s simply who we are.
So while it’s impressive, in a wasteful and strange way, to see that 14.3% of the country plans to dress their pets in a costume this month, it’s important to note that’s down from 2011 levels. We may be spending more total but the spending is being done by a smaller group of people. Putting your dog in a tuxedo is only fun if you have money to burn. We’ll be spending $350 million a year dressing our pets but you’ll see fewer dogs in tuxedos than you did three years ago.
That’s broadly true for the holiday season as a whole. A breakdown of the NRF data shows that the rate of change in total holiday spending peaked in 2010. Holiday sales grew that year by 5.3% then followed up in 2011 with 4.8% growth. Since then both growth and the overall economic recovery have been stagnant.
When you look at total holiday spend, including both the percentage of those of us who are celebrating our pagan past and splurging on extra pricy holiday gifts, you see that the recovery is stagnant. That seems intuitive to most but the headlines being pitched to you during this election year paint a far more robust picture. The truth is we’re no where near the greater than 6% growth rate we saw a decade ago, even if the dollar values are higher.
What’s that mean? Two things, broadly. First, it’s too soon to jump out and get into those consumer discretionary stocks that have been lagging. Second, you’re not crazy: the holidays aren’t what they used to be in terms of the economy and our spending outside of the wealthiest few.
If you want to do something to help, go out and buy your dog a batman costume. For the rest of us I’ll keep you posted on how the country is doing here at Yahoo Finance.
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