SA Asks: Can we expect a strong holiday sales season this year?
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With the state of the U.S. economy cited as a key concern among American voters in the November election, can we expect a strong holiday shopping season this year?
We asked Seeking Alpha analysts Justin Purohit, Amrita Roy and Julian Lin how they see the 2024 holiday season playing out.
Justin Purohit: The compressed holiday season this year presents a headwind for shopping activity. However, I believe that spending activity will still surpass expectations. Gas prices are trending to their lowest levels since 2020, giving consumers more weight to their wallets.
Post-election spending has also increased across political groups for different reasons, with one camp viewing it as retail therapy, while others are fueled by greater economic optimism. This optimism is reflected in recent data showing a notable surge in consumer sentiment. In my view, the combination of stronger sentiment and lower costs creates a favorable setup for an unexpectedly strong holiday shopping season.
Amrita Roy: With wage growth outpacing inflation for 18 months, along with a generally healthy household balance sheet, consumer sentiment has been improving. We have seen this translate into growing retail sales over the last few months.
As long as inflation remains anchored at current levels, with stable labor market conditions, I expect a strong holiday season in 2024, with the Conference Board Holiday Spending Survey estimating that the average US consumer expects to spend $1,063 on holiday-related purchases, which is 7.9% higher than last year.
While many retailers have highlighted the shorter window of time between Thanksgiving and Christmas this year as a potential headwind, I believe most of them have taken the right measures by providing holiday shoppers with earlier deals and sales, while optimizing their level of inventory at the same time.
Julian Lin: I expect a strong holiday season given the huge melt-up in the stock market. As they say these days, “You gotta spend your tendies!”
It may be worth cautioning that the economy often appears strongest at market tops.