by Calculated Risk on 9/19/2006 12:36:00 AM

The National Retail Federation (NRF) Sees Subdued Holiday Gains in 2006

While consumers have shown a surprising amount of resilience in 2006, retailers can expect a more subdued holiday season. According to the National Retail Federation (NRF), total holiday retail sales are expected to increase 5.0 percent over last year... In comparison, holiday sales in 2005 rose 6.1 percent...

"Consumers have faced a number of economic challenges this year and have taken them in stride," said NRF Chief Economist Rosalind Wells. "Although sales gains will not be as robust as last year, retailers can still expect above-average holiday sales growth."

Over the last ten years, the average percentage increase in sales for the holiday season is 4.6 percent. One-fifth of retail industry sales (19.9%) occur during the holiday season, making it the most important time period of the year for the industry.

Not too bad. And the AP reports: Target Increases Sales Forecast for September

Target Corp., the nation's second-largest discounter behind Wal-Mart Stores Inc., increased its sales forecast for September late Monday, a sign that retreating gasoline prices may be providing some relief to shoppers.

The Minneapolis-based retailer said in a recorded message that it now projects same-store sales, or sales at stores open at least a year, will increase to 5 percent for September. It had originally expected same-store sales to be up from 3 percent to 5 percent.

It looks like the U.S. consumer is still alive and spending.

So far the impact from the housing bust on the general economy has been limited. This makes sense. I expect the housing bust to impact the economy in three ways: first from the loss of housing related jobs, second from the loss of mortgage equity withdrawal (MEW), and third, from the impact of nontraditional mortgages.

Housing related job losses have been modest so far - although job losses should accelerate in the next few months. Cash-out refinance activity has still been strong and the impact from "toxic loans" has been minor.

So far, so good.