U.S. holiday sales will increase by 3.6 percent in 2016, more sharply than last year, as a stronger job market and robust household spending have improved consumer sentiment, according to an outlook from the leading retail industry group.
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The National Retail Federation forecast sales for the last two months of the year at $655.8 billion, excluding for autos, gasoline and dining out. This growth rate would be significantly higher than the 10-year average of 2.5 percent and above the 3 percent increase in 2015.
The NRF's forecast is one of the closely watched benchmarks ahead of the holiday season, which can account for 20 percent to 40 percent of annual sales for many retailers.
The season is also a major U.S. economic indicator because consumer spending accounts for about 70 percent of gross domestic product.
"This year hasn't been perfect, starting with a long summer and unseasonably warm fall, but our forecast reflects the very realistic steady momentum of the economy and industry expectations," NRF Chief Executive Officer Matthew Shay said in a statement.
Online sales will rise by 7 percent to 10 percent during the holiday season to as much as $117 billion, the group said.
Chief Economist Jack Kleinhenz said issues like increased geopolitical uncertainty, the presidential election and unseasonably warm weather could shake consumer confidence and affect shopping patterns.
"However," Kleinhenz said in a statement, "the economic spending power of the consumer is resilient."
(Reporting by Nandita Bose in Chicago; Editing by Lisa Von Ahn)