Business

Tuesday September 22, 2009

US holiday spending forecast at US$810mil


LOS ANGELES: US holiday spending is expected to be flat versus a year earlier, as consumers remain cautious and the national unemployment rate hovers at nearly 10%, Deloitte said in a forecast released late on Sunday.

Deloitte’s retail group expects total holiday sales to be US$810mil, excluding motor vehicles and petrol, for the November–January period.

A flat result would be an improvement from a year earlier when holiday sales fell 2.4%, but is hardly the encouraging sign some retailers and investors would hope for.

“Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures,” said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP.

“Americans continue to save at historically high rates while also paying down debt, and these factors combined suggest another chilly holiday season for retailers,” Steidtmann said.

He added that stable gas prices, strengthening home values and stock market gains would help support consumer spending during the all-important winter holiday season that starts on the Friday after the US Thanksgiving holiday.

While some data are pointing to an early economic recovery, many experts agree that consumers are not yet out of the woods.

US unemployment hit 9.7% in August and is expected to top 10% in what many economists are predicting will be a jobless recovery.

Federal Reserve chairman Ben S. Bernanke said last week that the US recession “is very likely over”, his most optimistic remark yet on recovery. — Reuters

US retail sales were up a better-than-expected 2.7% in August, their fastest pace in 3½ years, helped by the US government’s “cash for clunkers” programme.

Best Buy Co, the country’s largest electronic chain, recently raised its full-year forecast on improving sales trends and stabilising customer traffic after reporting that profit in its most recent quarter was weakened by promotions and sales of low-margin notebook computers.

Famed investor Warren Buffett said the “terror” that followed last year’s near-collapse of the financial system had dissipated, but that he did not believe the United States had begun to climb out of the worst recession since the Great Depression.

“A year ago you had a lot of uncertainties, but you didn’t have a lot of layoffs outside the financial services area,” said Stacy Janiak, vice-chairman and US retail leader for Deloitte.

Janiak said consumers had had a year to learn to stretch every dollar and expected holiday spending to be “controlled and conscious”.

She does not expect that consumers will find as many deep discounts as last year.

“I don’t think we’re going to see the same extreme promotion at the end of the season,” Janiak said. “Retailers appear to have prepared themselves for a challenging season by adjusting inventory and closely managing their expenses.” — Reuters


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