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Chrisman's Corner: The Many Small Gears of the Economy that Move Rates

Thanksgiving is past and now it is time to start taking your packages to the post office. Will there be more, less, or the same as last year? And can we determine which way the economy is heading given simple measures like that? JMAC’s experienced brokers know that rates usually react to retail sales news.

Economists have been coming out with their 2015 holiday sales outlook. With Black Friday (or what seems will soon become Black Wednesday or whatever) already past, and apparently disappointing, how is the current state of the American consumer and how much will be spent over the next month?

Over the course of the past year, the unemployment rate has dropped 0.7 percentage points with job growth averaging 234,500 per month. Thanks in part to the drop in oil prices in the fall of 2014, real disposable income is now 3.4 percent higher than the same time last year.

Essentially, America has more money to spend on gifts, and if that is the case we can expect retail sales to jump. Consumer confidence continues to trend higher with optimism about the future state of the economy continuing to improve.

Plenty of clients of JMAC’s brokers, when they’re shopping, don’t like to look at the prices and after all the different stores one visits it’s hard to add up the totals. But I’ll make it easier for you: according to the National Retail Federation’s holiday spending survey, the average holiday shopper is expected to spend $805.65 this year compared with $802.45 last year. It isn’t much, but multiplied by millions of consumers it adds up.

With holiday sales forecasts higher this year we expect total retail sales to rise year-over-year in the fourth quarter. But, in all honesty, holiday shopping is too hectic, there are too many people; I’m just going to let technology win and do my holiday shopping online. There’s the holiday spirit.