According to the latest survey from Gallup, Americans’ 2017 Christmas shopping plans suggest that retailers could see the best holiday sales in years. Gallup’s survey in October found that the average American respondent plans to spend $906 on Christmas and holiday gifts this year, up sharply from $785 this time last year.
That represents one of the largest year-over-year increases since Gallup began this annual survey and puts the holiday spending projection at its highest level in a decade. This year’s increase of $121 in average holiday spending suggests a further boost to the economy.
More specifically, 34% of Americans plan to spend at least $1,000 on Christmas/holiday gifts this year; 23% say they will spend between $500 and $999; and 28% expect to spend between $100 and $499. Just 6% of US adults reported that they won’t spend anything on Christmas gifts, which includes those who say they don’t celebrate the holiday.
Consumers’ enthusiasm for holiday shopping this year is most evident among middle- and lower-income adults. Although partisanship affects lots of attitudes these days, there was no material difference between Republicans and Democrats on average in the year-over-year change in spending intentions. Both groups plan to spend more on gifts this season.
Gallup also asked respondents about their spending throughout this year, not just during the upcoming holidays. Only 16% said they have spent less this year than last, and Gallup says that’s a new record low. About two-thirds (65%) said they spent about the same as last year. Some 17% said they will spend more this year than last.
The National Retail Federation notes that holiday sales have posted gains of less than 4% in four of the last five years. Only in 2014 did holiday sales top the 5% growth mark. Based on its latest survey, Gallup predicts that holiday spending growth will be at least 5% and likely more this year.
Fed Leaves Rate Unchanged, Trump Nominated Jerome Powell
At the conclusion of its two-day policy meeting in Washington on Wednesday, the Fed announced that it would leave its benchmark interest rate unchanged in a range of 1.0%-1.25%, after raising it twice earlier this year. This was widely expected.
The vote was unanimous, and the central bank did not alter any of the careful wording in its policy statement about its expected rate of future increases. The next rate hike is widely expected to occur at the next Fed meeting on December 12-13 when the Committee will likely hike the Fed Funds rate range by another quarter point.
President Donald Trump nominated current Fed Governor Jerome “Jay” Powell to replace Janet Yellen as Fed Chair today in a White House ceremony. This was no surprise. Mr. Powell, a Republican, was nominated to the Fed Board by President Obama back in late 2011.
Since he joined the Fed in early 2012, he has steadily supported Ms. Yellen’s approach to monetary policy and is expected to follow a similar trajectory if confirmed to lead the central bank. Mr. Powell has voted for every Fed policy decision since 2012, including its four interest rate increases and the gradual unwinding of the Fed’s stimulus campaign.
Mr. Powell (64) is a lawyer best known for his time with the Carlyle Group, a multinational private equity firm, where he founded and ran the Carlyle US Buyout Fund. From 2010 to 2012, he was a visiting scholar at the Bipartisan Policy Center, a think tank in Washington DC. He is reportedly very wealthy.
As I wrote on October 24, Mr. Powell wouldn’t have been my first choice among the candidates President Trump was reportedly considering, precisely because he voted in lockstep with Ms. Yellen during his time at the Fed. I would have preferred to see some new blood on the Board.
Mr. Powell is expected to continue quarter-point increases in the Fed Funds rate in 2018 and to continue paring down the Fed’s $4.2 trillion balance sheet – currently at the rate of $10 billion per month and gradually increasing to $50 billion a month.
The most interesting thing to me will be what Janet Yellen decides to do now that President Trump has replaced her as Fed Chair when her term ends in February. Ms. Yellen could decide to remain on the Fed Board as a regular voting member, unless Trump wants her out. But Mr. Trump has made several flattering comments about Yellen since meeting with her last week. So, it wouldn’t be a surprise if she decides to stay on. On the other hand, she can make a lot more money on the speaker circuit.