A strong economy and record economic growth have added vigor to this year’s holiday shopping season.
U.S. retailers expect a strong 6 to 7 percent increase from last season, and so far the numbers back up their expectations.
U.S. consumer spending increased a healthy 0.6 percent in October, a sign that people’s confidence in the economy is at peak levels.
Also, personal income — an indicator of consumer demand — rose a significant 2.75 percent since May. Last month alone, it jumped 1.3 percent, the largest increase in five years.
“People are feeling very optimistic,” said Annette Henkel, president of Minnesota Retail Merchants Association. “They have jobs and are investing. The economy is strong and people have money in their pockets.”
Retailers are confident they will have a successful selling season, and their confidence has so far rung true, she said.
Part of the buying frenzy will take place online, where consumers attracted by convenience and ultra-competitive prices are spending more than ever.
Henkel expects online sales to account for 10 percent of total holiday purchases this year, up from 5 percent last year.
She said most retailers see e-commerce as a way to expand sales, but other smaller businesses are scared by the Internet.
But overall, the Internet should help provide information about products and expand sales internationally.
“Sales so far have been brisk, and we expect that to continue,” said Joy Harris, a Best Buy spokeswoman.
Harris said people tend to spend more on the holidays.
The season’s hot ticket items so far are DVD players, digital cameras and TVs, and computers — all sold by Eden Prairie-based Best Buy, a leading seller of digital technology and consumer electronics.
But while most agree that traditional and online retailers will rake in record amounts, some differ over what is driving the spending spree.
A small increase in personal earnings will have a drastic effect on holiday spending, said Vernon Eidman, head of the applied economics department.
“I think the major impact on holiday spending is going to be with people who had healthy stock market gains,” he said. “These are going to be the people doing the big spending.”
A prosperous stock market helps drive consumer confidence, which in turn makes people feel like they can spend more during the holidays.
Peter Frost covers business and welcomes comments at [email protected] He can also be reached at (612) 627-4060 x3215.