Holiday retail sales this year will likely decline 1.0% from the year-ago period, which saw a -2.8% Y/Y decline, representing the first back-to-back decline in holiday retail sales in the last four decades. Availability of personal credit is a significant factor in these findings, with credit card companies down on raising rates/fees and even canceling cards in reaction to recent credit card legislation. Consumer credit fell by a record $21.6 billion in July to $2.5 trillion. Other major factors impacting 2009 holiday retail performance, according to Archstone Consulting management strategy and operations consultancy, include the savings rate, which dipped slightly to 4.2% from 4.5% in June, but it is still high compared to a Y/Y 2.6% savings rate; the US unemployment rate, which was at 9.7% in August having dropped from 61.9% in September 2008; and real wages having plummeted 4.1% in August Y/Y.
Archstone notes that with 7 million fewer people employed in the U.S this holiday season compared to 2008, many consumers will remain under considerable financial stress and will stay frugal.
RETAIL SALES FORECAST
Source: Archstone Consulting