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Christmas 2020: Shoppers expected to spend more but COVID-19 remains the wild card

The Salinas Californian logo The Salinas Californian 11/27/2020 Charisse Jones, USA TODAY
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Retailers expect a robust holiday shopping season this year, buoyed by a strong housing market, increased savings, and cheaper gas – though the uncertainties of the coronavirus could put a chill on buying. 

From the start of November through the end of the year, sales are forecast to grow between 3.6% and 5.2% as compared to the holiday season in 2019, according to the National Retail Federation. That amounts to between $755.3 billion and $767 billion in spending.

Del Monte Shopping Center on Tuesday, November 24, 2020. © Angelaydet Rocha Del Monte Shopping Center on Tuesday, November 24, 2020.

“We know we’ve got momentum as we head into the season,’’ NRF CEO Matthew Shay said in a call announcing the group's forecast. "We’ve seen consumers very, very engaged, looking for opportunities to celebrate.’’

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But the upbeat outlook also highlights the economic disparities that have been laid bare by the COVID-19 pandemic.

On the one hand, the expected shopping uptick is likely to be fueled by Americans who have extra money because of federal stimulus checks received at the start of the global health crisis, lower gas prices, and less overall spending because the coronavirus largely confined them to their homes.

a person standing at a train station: Del Monte Shopping Center on Tuesday, November 24, 2020. © Angelaydet Rocha Del Monte Shopping Center on Tuesday, November 24, 2020.

“These are positive factors that will influence the ability to spend.’’ Jack Kleinhenz, NRF's chief economist said.  

Homeowners may also feel more comfortable spending cash as housing prices soar, lifted by buyers eager to take advantage of historically low interest rates and jockeying to purchase one of the limited number of homes on the market.

On the other hand, millions of Americans remain out of work as the economy slowly recovers from a downturn sparked by the shutdowns implemented to slow the spread of the virus. 

“Certainly … there are millions of Americans that continue to need support,’’ Shay said, adding that the stimulus checks and increased unemployment benefits offered earlier in the year offer “a real lifeline for American families and for workers.''

The pandemic also remains a wild card.

“The prospect of not only widely distributed and highly effective vaccines but also the increased progress on therapeutics ... are all having an impact on consumer confidence,’’ Shay says.

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But the virus is also surging throughout the country, prompting some lawmakers to impose new restrictions.

“This can pump the brakes on momentum and have a consequence (on) spending,’’ Kleinhenz says. “Rising cases and tighter restrictions could set recovery in reverse.‘’

Follow Charisse Jones on Twitter @charissejones

This article originally appeared on USA TODAY: Christmas 2020: Shoppers expected to spend more but COVID-19 remains the wild card

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