Holiday retail sales figures much higher than expected - WMC Action News 5 - Memphis, Tennessee

Holiday retail sales figures much higher than expected

WASHINGTON (RNN) - Retail sales figures rose for the sixth consecutive month in December and were up 8.2 percent from 2009, according to the U.S. Department of Commerce.

According to the government, retail sales rose 0.6 percent from November to December, and 6.6 percent for the full year.

"As we reflect on the past year, today's data underscore that retail sales - a fundamental indicator of economic health - grew at a strong pace throughout the second half of 2010, signaling momentum in consumer spending and the overall economy," U.S. Commerce Secretary Gary Locke said in a statement.

[Click here for the U.S. Department of Commerce's complete report (PDF)]

This number outstripped the previously forecasted minimal gains by economists with the National Retail Federation (NRF), who predicted a 3.3 percent gain in holiday retail sales during the months of November and December.

November alone saw an increase of 8.1 percent from 2009.

Early estimates of holiday retail sales had them rebounding slightly from 2009's shopping slump, which saw the market slide instead of gain.

According to ShopperTrak, an organization that provides data on retail shopper traffic, sales increased 4 percent for the 2010 holiday season in total.

This trend would have followed the NRF forecast of small gains in retail sales mid-December, but the official numbers were much higher than expected. The NRF based its expectations on gains in the stock market, recent income growth and savings built up during the recession.

The reason that holiday sales are important is that they can be a major indicator for the state of the economy, which recently received a boost from the actions in Washington to cut taxes, said Keivan Deravi, professor of economics at Auburn University at Montgomery.

Deravi said holiday sales were just the "icing on the cake" after the government cut payroll and Social Security taxes and extended the middle class tax cut that injected money directly into the economy.

"Every indicator that we've been getting points that the economic activity is firming up, still slow, but not as slow as predicted before," he said. "It appears to have picked up steam and has firmed up and is gelling together.

"All of these elements have made people optimistic," he added.

The last time holiday retail sales rose was in 2007.

Sales for automobiles and parts also increased 14.2 percent from 2009, along with a 10.3 percent jump for gas station sales and a 13.1 percent increase for building material and garden supply stores.

Hope for the holiday sales had been momentarily stalled when sales on Black Friday were only marginally better than sales in 2009, but shoppers more than made up for it the weekend before Christmas.

On that day alone, known as "Super Saturday," retail sales were up 5.5 percent from last year, according to ShopperTrak.

Deravi believes that another reason sales went up this year was because of "consumer confidence and pent up demands." Consumers are tired of the doom and gloom of the past two years of a bad economy.

Shopping traffic, in general, also increased throughout the holidays but tapered off in the week leading up to Christmas. ShopperTrak blamed the sudden drop off on intense winter weather that slammed the South and Northeast, causing major transportation problems during the days leading up to and after Christmas.

However, online sales mitigated this figure and non-store sales were up 15 percent from 2009.

Meanwhile, Deravi is optimistic about the economic outlook for 2011 after the surprise jump in sales this holiday season and is glad that shoppers are returning to stores to dispel the gloom of the previous years.

"Kudos to them," he said.

Copyright 2011 Raycom Media. All rights reserved.

Powered by Frankly