Ready. Set. Shop. With six fewer shopping days this year between Thanksgiving and Christmas, retailers are in a race against the clock to get your holiday dollars.
While most economists are predicting sales growth of 3.5% to 4.5%, Wells Fargo economist Tim Quinlan is going out on a limb and predicting 5% growth in overall holiday sales.
“A lot of it has to do with low base effects from last year,” Quinlan tells Yahoo Finance’s “The First Trade.”
Overall, holiday sales in 2018 grew a less-than-expected 2.9% to $707.5 billion, according to the National Retail Federation. December retail sales last year actually fell 2%, the biggest sequential decline in almost a decade, as consumers dealt with a brutal stock market selloff and a government shutdown.
Fast forward to December 2019 and stocks are rallying to record highs, unemployment is at its lowest level in half a century, and consumers are still feeling pretty good – despite an ongoing trade war with China.
Consumer confidence dipped for a fourth straight month in November as economic conditions weaken toward the end of 2019, according to The Conference Board.
“Consumers’ short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2%,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement. “Overall, confidence levels are still high and should support solid spending during this holiday season.”
Hopes are high for e-commerce sales, which Quinlan expects will hit a milestone this holiday season.
“You go back to the 1990s, e-commerce was a 5% share of overall spending,” says Quinlan. “Our bet is that it will climb above 21%… making e-shopping the largest overall category of holiday spending this year.”
Thanksgiving being so late on the calendar this year pushes Cyber Monday into December, which can also skew the month’s sales numbers higher. “In our view, the way this calendar dynamic likely plays out is that we get a stronger December at the expense of a softer November.”
Quinlan says fewer shopping days could be “a little bit of a headwind” for retailers, but he remains optimistic.
“It’s tough to make the case that this kind of spending can be sustained throughout the course of next year,” he says, “but I do think that we finish strong at the end of 2019.”
Alexis Christoforous is co-anchor of Yahoo Finance’s “The First Trade.” Follow her on Twitter @AlexisTVNews.