Sales in the upcoming holiday retail season are expected to grow 5.7 percent over the same period last year, according to a projection by the National Retail Federation.
Combined offline and online holiday 2003 spending is forecast to reach $217.4 billion, indicating the Washington-based association's confidence in the economy. Holiday sales in 2002 inched only 2.2 percent higher to $205.6 billion.
“After several strong months of retail sales growth, it seems clear that the economy is picking up momentum just in time for the holidays,” NRF chief economist Rosalind Wells said.
The NRF did not disclose individual online and offline sales forecasts.
Wells cited myriad factors for the upbeat forecast. Among them were low inflation and interest rates, rising equity markets and growing consumer confidence. More disposable income from the withholding tax cut and child tax credit checks also helped.
Business spending contributed to this forecast, too. Business purchases of equipment and software in the second quarter rose 8 percent on an annual basis after a long period of weakness stretching to 2000.
Of course, issues like a slow job market, higher energy costs and political crises continue to impede sales growth.
Holidays are crucial for retailers, especially those selling toys, travel, food, music, videos, books, luxury products and other gifting items. Some toy retailers generate almost 50 percent of their business between Thanksgiving and Christmas.
This year's run-up to the holidays seems markedly different from 2002, Wells said. Last year, the NRF noticed strong retail sales in the first quarter and declines from there. This year, the first and second quarters were weak, but momentum gained in the third.
