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Regarding the economy, analysts are receiving “mixed signals.”

Published: November 12, 2024
Author: HFT

The National Retail Federation is optimistic about the holidays despite inconsistencies in the most recent economic figures.

Washington: NRF Chief Economist Jack Kleinhenz stated that despite inconsistencies in the most recent economic indicators, the organization still anticipates consistent sales growth for the winter holiday season.

In the November issue of NRF’s Monthly Economic Review, Kleinhenz stated, “The economic data calendar was quite busy at the end of October, but even though there were contradictions and mixed signals, we continue to believe the U.S. economy remains in a good place.” “Most importantly, our 2024 holiday forecast and retail sales projections remain unchanged despite the new data.”

As the economy “remains fundamentally healthy and continues to maintain its momentum,” the NRF predicted on October 15 that retail sales over the November-December holiday season will rise between 2.5 and 3.5 percent over 2023, reaching a total of between $979.5 billion and $989 billion.

Two weeks later, official figures revealed that the economy had only added 12,000 jobs in October and that the gross domestic product growth rate had fallen from 3 percent in the second quarter to 2.8 percent in the third. However, Kleinhenz stated in the latest report that employment had increased by 104,000 jobs on a three-month average, and that the decline in employment was due to the short-term effects of Hurricanes Helene and Milton as well as significant labor union strikes. Despite inflation and high interest rates, GDP growth was nonetheless “surprisingly strong,” maintaining a 10-quarter run of “solid” rises as consumer spending “continued to contribute a lot of horsepower.”

According to Kleinhenz, as of September, salaries and wages as determined by the Employment Cost Index were up 3.9 percent year over year, which was the weakest growth since late 2021 but still much higher than inflation. The Federal Reserve’s favored inflation indicator, the Personal Consumption Expenditures Price Index, increased by 2.1 percent year over year in September, which was the lowest since February 2021 and just above the Fed’s objective of 2 percent. Currently, services, not goods, are driving nearly all of the inflation.

According to Kleinhenz, it is too soon to say how the election results this week will affect the economy going ahead or for the rest of the year.

“This holiday season looks really good when you take everything into account,” Kleinhenz added. “With wage and salary growth continuing to maintain a healthy pace of expenditure, households are managing the restrictions of their paychecks and are starting the season in good financial shape. The economy is still doing well and is expanding more quickly than most people anticipated.

The outlook is still favorable overall, with rising property values and income supporting household balance sheets and a robust stock market.

According to Kleinhenz, “I am optimistic about the pace of economic activity in the final quarter of the year.” “My confidence in the strength of the economy and the near-term outlook has grown in light of the third-quarter spending performance and the thorough upward revisions for income, spending, and the savings rate that were made in late September.”

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