IF YOU THOUGHT the report that the U.S. economy grew at an annual rate of 7.2 percent was good news, wait until you see the revised estimate. I am told that the final figure will be at least 7.8 percent, and might well reach 8.0 percent.
So much for the look in the rear view mirror. The more important question is whether the road ahead will provide a smooth ride to a sustained period of economic growth or prove as bumpy as the one over which we have recently traveled. We may get the answer as the Christmas shopping season unfolds.
The season starts on the Friday after Thanksgiving Day, known in the retail trade as Black Friday (black, as in the black ink that is generated for retailers on this, the busiest shopping day of the year). However, we are no longer able to date the season's end: Consumers have become accustomed to postponing purchases until the January sales bargains.
The good news for retailers comes from the pollsters. A recent Gallup poll reports that consumer spending intentions are more positive than they have been since the Twin Towers came down on September 11. Gallup analysts say that retailers have reason to be "extremely optimistic" about the coming selling season.
Beware of polls of consumer intentions, warns Karlyn Bowman, doyenne of Washington poll analysts. She points out that we just don't have enough historical data to determine the extent to which intentions are matched by actions. That, of course, is a warning dear to
the hearts of economists, who prefer to look at hard data rather than what consumers say they intend to do before exposing themselves to the temptations of the malls (66 percent tell Harris Interactive pollsters they will do some of their shopping in malls), or the Internet (47 percent of online adults say they intend to shop via the Internet).
SOME OF THE DATA are not encouraging. After disposing of the bulk of their tax refunds in a summer shopping spree, consumers reined in their spending in September and October. They might be concerned about the level of their outstanding debt. Immediately before the slowdown in retail sales, consumers increased credit-card and other debt at an annual rate of 9.7 percent, by $15.1 billion, the largest jump since January.
Economists at Goldman Sachs see still other reasons for consumer caution. The slowdown in household spending, they say, "probably reflects a fading of the fiscal stimulus as well as a deceleration in hourly earnings growth. . . ."
Still, it is possible that consumers are merely catching their breaths before a final assault on the nation's shops. The National Retail Federation is expecting sales in this holiday season to top last year's by 5.7 percent. That might be a bit optimistic. John Bucksbaum, CEO of General Growth Properties, a Chicago-based Real Estate Investment Trust that owns or operates some 160 malls around the country, said that he is expecting "a positive sales season," with growth in the 3 to 4 percent range. That, he says, will make retailers quite happy.
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