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Why the Trump economy may unleash a holiday shopping boom

Brian Sozzi

All economic signs point to a robust holiday shopping season this year and retailers are expecting consumers to be in a particularly generous mood.

“Everything you can see in the numbers, and certainly in our sell-throughs, suggest the consumer is absolutely interested in participating with brands they believe in and provide a powerful experience,” V.F. Corp. CEO Steve Rendle tells Yahoo Finance. “We do see a reason to believe [in a good holiday season] across our portfolio.”

Rendle put his money where his mouth is on Friday. The owner of big retail brands such as The North Face, Timberland and Vans raised its full-year sales guidance following a much better than excepted third quarter.

For the year, V.F. Corp. (VFC) said it sees full-year sales of $13.7 billion vs. a prior estimate for $13.6 billion, powered by stronger expectations across the company’s product portfolio. Earnings, adjusted for one-time items, are now expected to be $3.65 a share compared to a prior forecast of $3.52 a share to $3.57 a share.

V.F. Corp.’s third-quarter earnings beat Wall Street profit forecasts by 10 cents a share.

The bullish sentiment on the consumer is similar at PayPal. The mobile payments giant said Thursday that the third quarter marked four straight quarters when the number of active accounts grew by 15%.

“We are seeing strong growth on all parts of our platform. As we move into the fourth quarter, we are actually expecting an acceleration in some of the trends we are seeing,” PayPal chief financial officer John Rainey tells Yahoo Finance.

Execs like Rendle and Rainey have good reason to head into the crucial holiday shopping season with more optimism than the norm.

‘We do not expect this holiday season to be average’

Consumers may be out buying an extra North Face fleece this holiday season.

Fan of President Trump or not, the fact is the U.S. economy he is overseeing is firing on all cylinders into year end.

Household net worth as a percentage of disposable income is at an all-time high. The U.S. savings rate remains elevated, putting consumers in a position to splurge come the holidays. The University of Michigan consumer sentiment index rose to a six-month high in September. Meanwhile, the Conference Board’s measure of consumer confidence is at its best level since the go-go days of 2000.

Couple that with an unemployment rate below 4% and rising hourly wages, consumers are very likely to be out in the malls and buying online more this holiday season than last year. That’s saying a lot considering holiday season sales last year rose a solid 5.5%, according to data from the National Retail Federation.

“We do not expect this holiday season to be average. There is a reasonable case to be made for sales to be even better than they have been on a historical basis,” wrote Wells Fargo senior economist Tim Quinlan in a new note to clients.

Quinlan points out that consumer spending momentum into the holidays is strong. At this time last year, retail sales had been up 3.9%. This year, that figure is 4.8%.

Quinlan and his team expect holiday sales to rise a robust 4.5%. The National Retail Federation projects holiday sales rising 4.8%.

PayPal’s Rainey adds, “The economy is pretty healthy right now – things are shaping up pretty well for the holiday season.”

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi

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