More Santas and Fewer Scrooges

By: Dr. Lynn Reaser

The apparent increase in shopping this holiday season could portend a general improvement in retail sales in 2011.

Consumers appear to be a little more confident.  While too many people remain unemployed, those who have jobs probably believe they can keep them, and some firms are adding workers.  Real earnings are at least modestly higher, home prices are stabilizing, and stock prices have rebounded impressively.  Meanwhile, shopping has never been easier, with lots of gifts just a click away with attractive discounts and free shipping.

Looking to next year, taxes on income, dividends, and capital gains will not rise next year and payroll taxes will fall.  Companies also are likely to take on more new hires in 2011 after pushing productivity gains in many cases to the limit.

Following three years of duress, consumers may have appliances or cars that need replacing or closets that need refreshing.  Many consumers also are now suffering “frugality fatigue”.  A few more presents under this year’s Christmas tree could herald even more gifts under next year’s tree.

Merry Christmas!


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