Holiday spending may surge

Updated: 2010-12-23 11:09

By Kelly Chung Dawson and Lian Mo (China Daily)

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 Holiday spending may surge

A US customer picks up Christmas gifts that were made in China at a shop in New York. Wu Kaixiang / Xinhua

NEW YORK / BEIJING - Holiday spending in the United States is up this season and financial experts from both the US and China are upbeat that it will herald increased trade between the two nations next year.

Statistics about holiday spending in the US are viewed as one of many major indicators of overall economic health and a predictor of consumer spending in the following year. Experts are saying that if consumption in the US surges in the holiday season, it will help China-US trade next year.

The National Retail Foundation in the US released a revised holiday retail sales forecast recently, updating its prediction of a 2.3 percent rise in holiday sales to 3.3 percent nationwide.

The report by an association that represents department stores, retailers, and chain restaurants and grocery stores echoes a series of surprisingly positive reports and surveys regarding holiday spending in the US this holiday season.

"Clearly retailers have found a way to tap into consumer spending power," said Scott Krugman, a spokesman for the foundation. "Consumers have been responding well, and we really think that the holiday numbers will be better than expected this year."

A Gallup poll released in November found that Americans surveyed predicted they would spend $714 on Christmas gifts this year, a 12 percent increase from the $638 they indicated they would spend during the same period in 2009. Spending generally increases between November and December, but even if November estimates were to stay consistent, Gallup found that holiday sales would increase an overall 2 percent from last year.

Online spending has also become an increasingly important indicator and a comScore report released earlier this month indicated that online spending for the holiday season was up 12 percent from last year, surpassing $17.5 billion for the first 35 days of the 2010 holiday shopping period.

"We saw a huge surge in spending. The numbers we have in hand so far through November are definitely strong," said Christopher Low, chief economist for research and investment firm Financial Capital Markets. "Retailers are optimistic and the stock market is at new highs for the year. But we will find out in January if that optimism is justified."

Charles Vehorn, an assistant professor of economics at Radford University, said that "recovery is a matter of time and the surge in holiday spending is a positive harbinger".

That bodes well for Chinese exporters since the US is China's largest exporting destination.

Lai Pingyao, professor at the University of International Business and Economics in Beijing, predicted that the volume of trade between the two nations will increase by at least 15 percent next year.

The total value of trade between US and China in the first 11 months this year is $346.89 billion, about a 30-percent increase year-on-year.

"As China's foreign trade recovers, it may not be able to sustain that high level of trade with the US but trade between US and China is likely to enter a stage with a stable and gradual growth rate," said Song Hong, director of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences in Beijing.

China's imports from the US in November were $9.73 billion, the highest total for the year and 28 percent up from the same period last year.

"Whether imports continue to increase still depends on the US' exports policy," Song said. "But exports to the US seem more optimistic for me and the trade surplus may be sustained at a similar level," Song said.

But the trade surplus between China and US in November was $16.72 billion, the lowest since July but up 30.6 percent year-on- year.

"The US economic recovery is just one side reason for the US-China trade prospects. The Chinese government's future policies toward inflation may play a bigger role in deciding exports next year," Lai said.


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