Holiday retail sales to increase 2.3% – who will spend first businesses or consumers?

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The National Retail Federation predicts a 2.3% increase in sales over the holiday season and Christmas. Although the growth is less than the 2.5% average of the last ten years – nevertheless it is much better than the 3.9% decline in 2008 and a meagre 0.4% growth in 2009. The prediction of  the surge in retail sales is tempered by the qualifiers surrounding employment. Without jobs people are less likely to buy and in any case everyone will look for bargains. So margins are likely to be squeezed and more volume,better supply chain efficiency, less waste and returns are the focus for the ultimate job engine in the US – consumer spending.

The question is who will spend first – businesses or individual consumers?

If consumers spend, company leaders are willing to invest in new projects and employees – the classic chicken or egg syndrome. The cycle will probably break if the Dow crosses 11,000 and stays there.

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