Despite Saturday’s snowstorm — which ultimately should not have a major impact on sales — economists expect a solid holiday. That, coupled with election-year politics, is likely to give the economy a strong start in 2004, but consumers won’t allow it to carry into 2005, experts say, unless there’s real progress in job creation and other fiscal fundamentals.
Optimism is limited and somewhat fragile, they note. Just as expectations for the holiday season rose with a strong Black Friday performance but fell with last week’s reports on November retail sales, rays of sunshine on the economic landscape could be eclipsed by dark clouds if consumers don’t see convincing evidence that the bounce back from an economic slump is real.
While recent data about jobs and gross domestic product have provided hopeful signs about the nation’s finances, an uneasy feeling remains among consumers and those who study their behavior. That nervousness was underscored last month, when retail figures for November revealed strength at the high end but weakness among low- and middle-income consumers as Sears, Roebuck & Co., Kohl’s and other moderate retailers failed to meet analysts’ expectations, their own plans or both.
December may very well produce the 4 to 5 percent gains in holiday sales that many anticipated for the holiday season, but that won’t alter deep-seated uneasiness about jobs, household finances or unsettling political news from overseas.
“That uncertainty will carry through most of 2004, without any dramatic robust growth in numbers over 2003,” predicted Andy Moser, senior managing director of GMAC Commercial Finance, Retail Finance Group. “Will consumers be willing to take on more debt next year? Yes, and that means that economic growth will be fueled by consumer debt. But consumers will remain nervous right up through the election.”
He expects some election-related job creation, “but not anything significant,” and professes concern about real wage growth, the principal generator of discretionary spending.
“My great fear,” he added, “is what happens in 2005. It will be a post-election year, and it is hard to imagine what we will see economically because there’s still an unknown regarding the presidency.”