Stores across much of the country have a glimmer of hope for a December holiday surge after the Federal Reserve's Beige Book report, released Wednesday, showed an overall increase in consumer spending in October and early November.
WASHINGTON — Stores across much of the country have a glimmer of hope for a December holiday surge after the Federal Reserve's Beige Book report, released Wednesday, showed an overall increase in consumer spending in October and early November.
The anecdotal report, based on surveys of the Fed's 12 districts, showed moderate economic growth on balance. The economic expansion quickened in the New York and Richmond, Va., districts, while Dallas slowed slightly and Atlanta came up with a mixed result.
There were "solid increases" in consumer spending in Kansas City and Richmond, lesser gains in Atlanta, Chicago and New York, and a softening in Boston.
"What we're seeing is mixed reports and the Beige Book kind of captures that," said Brian Bethune, U.S. economist at Global Insight. "The Wal-Mart reports are definitely not impressive and that seems to be a pretty good barometer for overall sales. But other retailers and online sales are seeming to report strong holiday sales, so it's a little early to say."
Wal-Mart said its same-store sales would dip 0.1 percent in November, its first drop in years.
Bethune said there were signs consumer confidence picked up later in the month, once the uncertainty of the congressional elections passed.
"Now it seems that people are getting more into the mood.…Thanksgiving overall was good, with the exception of Wal-Mart," he said, "so, overall, it doesn't look too bad."
However, time will tell to what degree stores and brands will be able to capitalize on the season.
"Consumers are experiencing rising wages and incomes, and they're spending," said Richard Yamarone, chief economist at Argus Research Corp. "They're ringing the cash registers; whether or not retailers can transform them into profitable sales is another question. The consumer is strong and spending up a storm."
Many stores are keeping a wary eye on softening in the housing market and looking out for economic ripples.
"Many retail contacts remain concerned about the downturn in the housing market," said the Beige Book report of Boston area stores, where same-store sales ranged from down 15 percent to up 8 percent from a year earlier.New York area retailers reported sales were on or above plan in October and early November.
"Looking ahead to the holiday shopping season, [New York] retailers generally expect same-stores sales gains to range from 2 to 5 percent," said the report.
In Philadelphia, department and most apparel specialty stores said sales of fall fashions were up solidly compared with a year ago. It was a different story in the Dallas district, where retail sales growth was weaker than expected, and some stores expected a larger boost from the drop in gasoline prices.
"Sales continue to be weakest to lower-income customers who were more affected by high energy costs," said the report. "Sales were weakest for home items, particularly for furniture. Respondents have become more cautious about the outlook for holiday sales, which they say will be very competitive."
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