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Economic Forecasts

2016 Holiday Sales to Top Last Year's

Kiplinger's latest forecast on retail sales and consumer spending


GDP 1.5% growth for the year; a 2.1% pace in '17 More »
Jobs Hiring at 150K-200K/month through '16 More »
Interest rates 10-year T-notes at 2.5% by end '17 More »
Inflation 2.0% for '16, 2.4% in '17 More »
Business spending Slight gain in '17 after flat '16 More »
Energy Crude oil trading from $40 to $45 per barrel in Dec. More »
Housing Single-family starts up 9% in '16, 11% in '17 More »
Retail sales Growing 3.7% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, matching increase in '16 More »

Strong momentum in retail sales suggests a good holiday sales season this month and next.

Sales of apparel, electronics and other items typically found under the Christmas tree are poised to rise 4.1% this year — not as good as the 4.8% posted during the 2014 holiday season, but much better than the 2.5% hike last year. Online holiday sales are likely to post their strongest growth in five years this season.

See Also: All Our Economic Outlooks

Retail sales overall — which include autos, gasoline, restaurant meals, construction materials and garden supplies — surged in October for the second straight month, after a lackluster August. Sellers of motor vehicles, building materials, sporting goods and hobby supplies, along with miscellaneous retailers, all saw 1% or more increases in both September and October. Gasoline sales rose strongly because prices went up.


The main areas showing weakness: Furniture and home furnishings, department stores and restaurants. The large drop in restaurant sales was unusual, but it may indicate a turn toward eating at home, given that prices of groceries have been falling for several months while restaurant prices have maintained a steady 2.5% growth rate this year.

Department store woes appear to be accelerating: Their sales have dropped at a 10% annual rate since July, sparking discounts galore. Not coincidentally, online sales have swelled at a 14% clip over the same time period. Clothing stores have had good sales through October, but may fall back a bit in November because of unseasonably warm early November weather (in many parts of the country).

For 2017, we see retail and food-services sales (but not gasoline, which has significant price fluctuations) rising 3.7%, a tad below this year. While most sectors should see as good or better sales growth next year, we expect a slowing of previously hot expansions in motor vehicle and restaurant sales. Consumer spending should hold up as wage growth picks up through 2017. Trump tax cuts would give consumer spending a boost, too.

SEE ALSO: 4 Retailer Stocks to Add to Your Shopping List: Amazon, Dick's, Signet, Ulta

Source: Department of Energy, Price Statistics