The holiday season was a four-week test to see how Americans will spend their money in retailers. Shoppers started the season more confident this year due to six months of strong economic growth, growing wages and a sharp decline in gasoline prices. While shoppers had more confidence, retailers remained cautious.
Macy’s Inc. and Wal-Mart Stores are two of the major retailers that cut their financial forecasts. The biggest driver of economic growth in the U.S. is consumer spending. An estimated 140 million people planned to shop Thanksgiving weekend, and the National Retail Federation expected an increase of 4.1 percent in sales this past November.
The economic outlook and data going into the holiday shopping season was solid. Personal spending had increased 0.2 percent to fund everything from clothing and cars to heating and haircuts. Compared to personal spending, real disposable personal income was only up 0.1% percent. U.S. gross domestic product has the strongest six-month stretch since 2003 increasing from 3.9 percent to 4.6 percent. The big drop in gasoline prices adds to the strong expectations for the holiday shopping season. Retailers still remained cautious before the holiday season about how strong the effect of lower gas prices will have on consumer spending habits.