James Smith

Smith, professor in WCU’s Institute for the Economy and the Future, said that American consumers are in the mood to spend this holiday season, as shown by every survey of consumer confidence. With the unemployment rate at 4.4 percent in October, the lowest since early 2000, and a record 145,287,000 people employed, fewer people have reason to worry about their jobs than has been the case for the past six years, said Smith, named by The Wall Street Journal as “the most accurate forecaster” three times in the past ten years.

“Consumers certainly have the wherewithal to spend heartily,” he said. “Disposable personal income was running at a record seasonally adjusted annual rate of $9.7 trillion in the third quarter or $32,259 on a per capita basis.”

Consumers are also wealthier than in previous years, Smith said. Statistics from the Board of Governors of the Federal Reserve System show that Americans collectively owned $66.0 trillion of assets on June 30 and had $12.7 trillion of liabilities. That means American consumers’ net worth was $53.3 trillion, which is more than four times the size of the total economy, he said.

“Just turning a small portion of that wealth into consumption expenditures will cause every cash register in the country to jingle merrily,” Smith said. “The usual prophets of a gloomy retail sales outlook will be driven to dismay as their predictions are proven to be horribly wrong, which is really good news for the rest of us.”

In addition, high retail demand will provide hundreds of thousands of temporary job opportunities for people who want to earn a little more spending money at this time of year, which also will add to retail sales, he said.

“The only thing holding us back from a huge increase compared to last year is the caution of many retailers in ordering inventory. Anecdotal evidence from trucking firms and the Port of Long Beach, where the majority of Asian imports arrive in the United States, suggest volumes are much lower than anticipated,” Smith said. “Since it’s very difficult to sell people gift certificates in lieu of the merchandise they really want, retailers will miss sales they otherwise could have made. This may restrict the year-over-year increase to only 6 to 7 percent when it could have been an 11 to 12 percent jump.”

Smith has one final word of advice for consumers – don’t wait until the last minute. “It’s a good year to get your shopping done early. Procrastination may leave you with very few options for your perfect gifts for all those special people in your life,” he said.