The long-awaited bounce in economic activity has finally arrived. While we had forecast a pickup in the second half of the year, this kind of strength was not anticipated.
After several strong months of retail sales growth, it seems clear that the economy is picking up momentum just in time for the holidays.
Consumers shook off concerns about higher energy costs and responded well to the seasonal promotions. If November is any indication of what consumers are capable of, retailers can expect a very happy holiday season.
Since the terrorist attacks are so fresh and our country's response is not yet known, it is premature to make definitive judgments about the economy. We can only speculate based upon what we think the administration will do and how consumers will respond.
Although consumer spending has been inconsistent in recent months, we expect the holiday season to bring more stability to the industry.
Consumers will still feel compelled to seek out the best deal for their money.
Recession remains a possibility. However, we feel that the strong underpinnings of the U.S. economy and the resilience of the U.S. consumer will force the stalling growth over the next few months to give way to a rebound beginning next year.
There are some consumers who will say, 'I want the best I can get' and will forgo something else.
As employment expands and wages and salaries firm, a broader spectrum of consumers will be in better financial shape, which should help lift sales more evenly across the board.
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