The holiday shopping season got off to a strong start over the long weekend, with nearly 5 in 6 Americans making an appearance at the malls or visiting retailers online as rising spirits prompted an early hunt for bargains.
Still looming over the critical Christmas gift-buying bonanza is the threat of sharp tax increases hitting much of the middle class in five weeks, and signs are that consumers are starting to pay more attention to the standoff between the White House and congressional Republicans over how to avert a budget catastrophe at year's end.
The White House warned Monday that the potential to spoil the holidays carries into next year if Republicans continue to insist on renewing all of the George W. Bush-era tax cuts — not just those for middle-class individuals earning less than $200,000 a year, as President Obama wants. With consumers powering about 70 percent of the country's economic growth throughout the year, and even more during the holiday season, the White House estimated growth would fall by 1.7 percentage points next year if the middle-class tax cuts are allowed to lapse.
While the tax fight promises to intensify in coming weeks and possibly hamper late-season sales, consumers lured by aggressive store promotions paid little heed in the past four days, A record 247 million people trundled off to the malls and clicked onto online shopping sites during the long Thanksgiving weekend, according to a survey for the National Retail Federation.
Those who made purchases felt more generous than last year, spending an average of $423 as compared with $398 last year, the federation said. The total spent across the country since the season officially began late Thanksgiving evening reached nearly $60 billion, the retail trade group said.
"Reports from the Thanksgiving weekend appear to be relatively good, although the early opening of some stores on Thanksgiving itself appears to have detracted from sales the day after," said David Kelly, chief global strategist at J.P. Morgan Funds.
He said the unexpectedly robust showing underscores the growing belief among economists that the underlying economy is strengthening and should do well next year — if a disaster can be avoided in Washington over the looming "fiscal cliff" deadline for $500 billion in expiring tax cuts and spending cuts.
"U.S. economic numbers appear to be on an upswing, a trend which should be sustained" in coming weeks, Mr. Kelly said.
While Christmas has always been an important time for buying gifts, more and more consumers are taking advantage of the bargains available to buy things for themselves, said Matthew Shay, president of the retail federation, with clothing, electronics, games, and jewelry being among the top purchases for "self-gifters" last weekend.
Chris G. Christopher, economist at IHS Global Insight, said consumers are indulging themselves with online purchases more than ever.
"Clicks are outpacing bricks," he said. "We expect online holiday retail sales to rise 17 percent above last year, significantly stronger than 2011's 16 percent increase, and 2010's 14 percent increase."
Online sales are no longer an adjunct to the year-end retail season, but are taking a more central role, he said, which is why bricks-and-mortar retailers are straining so hard to beat as well as emulate the online competition.
"This year's holiday online retail sales are projected to be in the $79 billion ballpark," he said. "This is no longer chump change by any means. And, the bricks are looking to cash in on the clicks."
Beneath all the consumer bravado this weekend lurked some growing insecurity about mounting debts, stagnant incomes and shaky jobs, however, according to a financial security index published Monday by Bankrate.com. The index declined for the third time this year in November.
"Since the election was resolved by the time the poll was conducted, it was evident that uncertainty over the fiscal cliff was beginning to creep in," said Greg McBride, senior analyst at Bankrate.com.
© Copyright 2015 The Washington Times, LLC. Click here for reprint permission.