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Purdue Economist Expects Increase In Holiday Spending
Updated October 15, 2014 7:38 AM | Filed under: Business
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(UNDATED) - It's only the middle of October, but stores are already thinking about how much they'd like to sell over the coming holiday season.

One economist says retail sales should grow this year. "Last year was about a 2.8-percent increase (over the previous holiday season). This year, most experts believe sales will increase between four-percent and five-percent, a pretty significant increase over last year," said Richard Feinberg, professor of retail management at Purdue. Though retailers would like to see higher increases, but Feinberg says a four-percent hike would be considered excellent coming off a decade of mostly low-single digit increases at best.

Though overall consumer income is largely stagnant, Feinberg says there is more money for consumers to spend now since the unemployment rate has dropped. "People in the aggregate have more to spend this year, and the back-to school shopping season was relatively restrained, so it appears consumers are planning to spend more during the holidays," Feinberg said.

Internet retailers are expected to again have higher sales increases than traditional stores, the 'Amazon effect' as Fineberg calls it. "The first place people go online when they want to buy something is Amazon. If Amazon has something cheaper than a local store or another store with a web site, they will purchase it from whoever sells it cheapest on Amazon," Feinberg said.



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