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Retail Sales Rising; Will It Get Better In The Holiday Season?

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October saw an economic rejuvenation thanks to the signs that the US economy is past the worst inflation phases. Reports that retail sales spiked by about 6 percent highlight that people are shedding off their concerns about inflation and are now actively shopping for new goods and services to welcome the holiday season.

The holiday season is setting in, and the sales figures point to new highs as the year ends. A jump in inflation from the start of the year has seen people shift to essential goods and services. Borrowing has also felt the effect of increasing interest rates by the fed reserve set to curb inflation. Trends also show that people are also warming up to discretionary goods, which is good news for retail sales figures going into December.

Credit Cards and Savings Driving Up Sales

As governments try to tackle inflation, which is pushing up wages in many industries, consumers now have confidence in taking new credit to fund their holiday spending. Savings have been on top of the list of places where consumers are getting money to spend on new goods and services.

Credit cards have also seen a spike in usage in October, where retail sales jumped by about 6 percent. NFR figures show that high employment numbers reported in the last quarter have been responsible for the surge of new cards to fund spending in the last quarter.

Holiday Season Pushing Up the Numbers

In the past, the holiday season has often witnessed a spike in credit spending. While 2022 has been a strange year compared to others in the last decade, the culture of increased spending from October to December will continue. Indeed, 2022 has seen an increase in the cost of living and instabilities in many parts of the world, leading to supply chain issues.  

Often, consumers set aside part of their savings to unleash it during the holidays in the last quarter. The NRF figures support the fact, as October highlighted a meaningful spike in spending across different industries, higher than in most months since January. Also, October has seen a modest shift away from the preference for essential goods amidst the biggest cost-of-living crisis in the world. 

Enticing Deals in November and December

While the figures produced by the NRF are positive for the retail sector, massive discounts on goods and services in December and November will significantly push retail sales even higher. Black Friday is one of those deals that will probably help November retail figures surpass October’s by a mile. 

A point to consider is that Amazon and other big retail stores discounted some of their products and services in October to boost their sales and, ultimately, their earnings going into the last quarter. However, compared to 2021, the final figures were still short of last year’s high in the same period. 

Such a damning response to the massive sale discounts in October might creep into November and December, forcing stores to set lower prices to capture people’s attention. Lower prices might be good but could influence the earnings of stores all over the USA. However, that fact is still speculative.

The Rebound of Some Industries

The apparel industry, worst hit during the pandemic, has registered growth. Projections highlight it will hit 7 percent in growth over the Christmas period. The growth rates in apparel and the projected figures are welcome news to other industries, as well as the retail space. Noteworthy, the driving force in the apparel industry is people returning to work after an extended period of working from home. 

Surge at the End of Q4 2022?

It is not definite that people will spend more money in retail stores in December and November. However, historical data highlights a surge in spending during the same period. While October registered an upsurge in retail sales, it also recorded a slump in year-on-year growth. The holidays might be the spark that sets retail records in 2022. 

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