As Thanksgiving fades into the past, attention shifts to holiday shopping. John Chang, National Director of Research and Advisory Services at Marcus & Millichap, acknowledges that consumer spending during this time can greatly impact retail property performance as well as other sectors such as industrial properties, self storage and housing market.
In a recent video by Marcus & Millichap, Chang discusses the following:
– The National Retail Federation (NRF) predicts a 2.5% to 3.5% increase in retail sales (down from last year’s 3.9%).
– The International Council of Shopping Centers (ICSC) forecasts growth between 3% and 3.5%
– Inflation-adjusted sales growth ranged between -.1% and .8% during the holiday season in previous years.
However, Chang believes that this year’s holiday sales will surpass these predictions for several reasons:
-The job market: According to Chang there are currently more jobs in the U.S than ever before with approximately159 million people employed as of October2024 – an increase of about seven and a half million jobs since October2019 before the pandemic.
-Hourly wages: People are earning more with an average hourly wage of $35.46 recorded in October2024 – a significant increase from $28 recorded back in October2019.
-Credit card debt: While credit card debt stands at $1.2 trillion currently ,Chang notes that when considering how much wages have increased it is not out-of-line with previous years ranging around four percent which was also observed from2012to2019 .
-Household debt service payments : These payments make up only11 .5 %of disposable income which is belowthe average reportedfrom2012to20Ig .
Total savings : Savings including money market accounts have increased by$4trillion due to pandemic related factors resultinginan inflation adjusted gainofabout20%.
While these are the numbers, the real question is whether consumers feel confident and willing to spend. Chang points out that the recent election heavily focused on economic issues which could potentially lead to a short-term boost in consumer confidence levels. If this occurs, holiday retail sales may exceed expectations.
