Economic Impact: Optimistic outlook should mean strong holiday sales for retailers

The holiday selling season is in full force at stores in malls and shopping centers.

It is the time of year that represents about 20 percent of the retail industry's total sales.

And based on recent announcements by some national retailers and online sellers that are looking to hire more seasonal workers than last year, it looks like the chains are optimistic about the upcoming holiday selling season.

There is good reason for that bright outlook.

Employment in the nation is picking up and the unemployment rate is declining.

Personal income is up 3.9 percent for the 12 months that ended in October compared with the previous 12-month period, or by $612 billion. American consumers like to spend, so much of that increase in income will translate into purchases.

But will that result in more holiday sales than last year?

Back-to-school sales are often a good barometer of holiday sales. This year, back-to-school sales were pretty good, according to department stores such as Macy’s, Kohl’s and J.C. Penney.

The National Retail Federation, the nation's largest retail trade group, predicts a 3.6 percent increase in holiday sales, including online business, to $655.9 billion compared with $632.8 billion in 2015.

In September, global financial services firm Deloitte forecast this year's holiday sales to rise between 3.6 percent and 4 percent from November through January compared with the same period a year ago.

That sales increase sounds about right for the nation. Based on the most recent economic figures, Virginia and Richmond sales are not as easy to forecast.

Nonfarm employment grew 1.8 percent in Virginia during September compared with a year ago. During the same period, employment increased 2.9 percent in Richmond and 1.8 percent in the nation.

The unemployment rate in Virginia remains below that of the nation but has inched up recently.

After dropping to a low point of 3.8 percent on a seasonally adjusted basis in May, 2016, the jobless rate in Virginia has inched upward to 4.4 percent in October.

For the Richmond region, the seasonally adjusted rate rose from 3.7 percent in May to 4.4 percent in October. The local rate also was up from 4.1 percent in September and 4.3 percent in October 2015.

For the U.S., the jobless rate held steady at 4.9 percent during the same period.

Even though economic growth in the state and Richmond is on par or better than the nation, the latest retail sales figures don’t reflect that strength.

A seasonally adjusted six-month moving average of retail sales in Virginia shows 1.1 percent growth from a year ago in September.

The Richmond area has seen an average retail sales decline of 0.6 percent, perhaps because of some store closings including the two Macy’s stores in Regency Square mall and a Macy's store in Virginia Center Commons in March.

A lot has happened in the U.S. economy since the September and October holiday sales predictions were released. A new president was elected, who has ushered in optimism about increased economic growth based on the reaction of the major U.S. stock indexes.

This might be a good year to throw out the recent historical trends and look for sales in the nation to be higher than the National Retail Federation and Deloitte forecast.

With the more optimistic outlook for national growth and the strength of the labor market, 3 percent growth in retail sales in both Virginia and the Richmond region this holiday selling season compared with last year is possible.