Tepid kickoff to holiday shopping in November

Black Friday shoppers
Tired shoppers in Costa Mesa’s South Coast Plaza mall take a break on Black Friday.
(Francine Orr / Los Angeles Times)

Consumers gave retailers only a modest sales boost in November, showing a reluctance to spend that could signal ill tidings for the crucial holiday season.

Last month, retail sales climbed to $465.5 billion, up 0.1% from October and up 3.8% from November 2015, the Commerce Department said Wednesday. Some forecasts had predicted a rise of at least 0.3%. 

“This holiday season may turn out to be below par or not as healthy as what we expected,” said Sung Won Sohn, an economist at Cal State Channel Islands. “I am bracing for a small disappointment.”

Sohn said that many economists were predicting a more robust November after strong growth in the previous two months. However, October retail sales were also revised down to 0.6% from an original estimate of 0.8%, indicating they were not as strong as previously thought, he said.


Retail sales in November can be a crucial barometer of consumer sentiment and retail performance for the holiday season — a make-or-break period when retailers can sometimes rake in 40% of their annual sales.

Shoppers hit up retailers during Thanksgiving and Black Friday, the traditional kickoff to the holiday season. More than 154 million shopped during the four-day weekend starting Thanksgiving Day, up from 151 million a year ago, according to a survey from the National Retail Federation. However, average consumer spending dropped.

“Consumers are looking for deep discounts and price cuts,” said Lindsey M. Piegza, chief economist at Stifel Fixed Income. “More shoppers are out this season compared to 2015, but they are increasingly hunting for bargains.”

The lackluster November was at odds with some recent forecasts that painted a more upbeat picture of the economy in the fourth quarter. 


Although the economy is doing well overall, economists said that many consumers are still unsure about their personal finances.

“People at the lower end of the income spectrum, they are the ones who are more cautious,” Sohn said. “They have not fared as well as people in the middle and upper-income brackets.”

Some analysts said that retailers may make up lost ground in December, when shoppers who have waited until the last minute hit stores in the final weeks before Christmas. Last week, consumer sentiment hit its highest level since January 2015, according to a survey from the University of Michigan.

“The surge was largely due to consumers’ initial reactions to [president-elect Donald] Trump’s surprise victory,” Richard Curtin, chief economist of the survey, said in a statement. “More consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys.”

Extending that confidence into 2017 will hinge heavily on president-elect Trump providing early signs of positive economic growth, Curtin said. There were, however, some exceptions to that jump in optimism — primarily among people with college degrees and those living in the Northeast, he said.

The holiday season comes at a time when the economy is showing growth. The Labor Department reported that 178,000 net jobs were added in November, while the unemployment rate fell three-tenths of a percentage point to 4.6% — the lowest since 2007.

These positive economic signs prompted the Federal Reserve to raise its short-term interest rate on Wednesday for the first time in a year; it also plans to raise rates three times in 2017, up from a previous forecast of two.

November’s growth was dragged down by a 0.5% decline for dealers of motor vehicles and parts. If that category is stripped out, overall retail sales grew 0.2%.


In all, 10 out of 13 categories reported growth. 

Sales at electronics and appliance merchants, always a popular category during Black Friday sales, grew 0.1%. Furniture sales rose 0.7%.

Department stores, which have been struggling as shoppers increasingly turn online and to specialty boutiques, reported a 0.2% drop. Sporting goods, book and music retailers reported a 1% drop. 

Follow Shan on Twitter @ByShanLi


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3:15 p.m.: This article was updated with additional reporting on the causes of the modest uptick in November retail sales.

This article was originally published at 6:30 a.m.

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