Happy holidays?
In a quick review of three key indicators — borrowing, spending, and working — the word for the holidays seems to be “proceed with caution.”
This week the US Federal Reserve unanimously agreed to keep near zero the cost of borrowing money for an extended period.
According to TradingEconomics.com, the United States unemployment rate stands at 9.80 percent. (The labor force is defined as the number of people employed plus the number unemployed but seeking work. The non-labor force includes those who are not looking for work, those who are institutionalized, and those serving in the military.)
In the national employment report compiled by ADP, non-farm private employment was reduced by another 203,000 from September to October 2009. However, October was the seventh consecutive month in which the decline in employment was less than in the previous month.
ADP projects that despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least a few more months.
In light of high unemployment rates, Gallup is reporting that Americans are planning to spend about $740 on gifts this year, down from $801 in 2008. 33% today, versus 35% a year ago, say they will spend less, while over half plan to spend about the same amount and 9% will spend more.
Though total sales are expected to be lower this holiday season, U.S. online sales are expected to rise eight percent and reach $44.7 billion. Big-box retailers such as Walmart and Amazon – those able to support discounts – are likely to see the best results.