US: Upside risk for holiday sales - Wells Fargo
Analysts from Wells Fargo, are estimating overall retail sales to increase 4.3 percent compared to 2016. The believe that the increase in consumer confidence will be enough to carry the consumer forward this year and contribute to make this holiday sales season better than what we saw last year.
“Together with higher holiday sales for this coming season, we are also forecasting higher overall retail sales for the year compared to what we saw last year. In 2016, overall retail sales increased by a scant 3.0 percent versus 2015. However, this year, we are estimating overall retail sales to increase 4.3 percent compared to 2016.”
“We believe this increase will be driven by still relatively strong sales of automobiles, which were helped in September and October by the effects of the hurricanes that hit Florida and Texas, as well as building material & garden equipment & supplies dealers sales, furniture & home furniture store sales, general merchandise sales and non-store retailer sales. Another sector that saw sales increase considerably during the year was gasoline stations. However, much of the increase in gasoline sales was also due to the hurricane season as gasoline prices increased considerably during the year.”
“While we have a 4.0 percent growth projection for holiday sales this season, and 4.3 percent for overall retail and food services sales for the year as a whole, we need to point out that there is the potential for sales to be a bit higher than what we are forecasting in lieu of the still strong performance of the Consumer Confidence Index.”
“Improved confidence in the future has brought down the saving rate at the same time as Americans have continued to borrow to complement income growth. These additions have helped keep the growth rate of PCE on a stronger path than the path established by personal and disposable income. Furthermore, if Americans believe they will pay lower taxes next year due to tax reform making its rounds through the U.S. Congress, then we may see an upward surprise during this holiday season. That is, we see risks for holiday sales to be tilted to the upside.”