News Desk

Sluggish Shopping Projected for Holidays

The story: New data from the Maine Revenue Service and the National Retail Federation shows consumer spending continued downward in August, continuing an economically discouraging consumer trend. The NRF estimates retail spending will increase only 2.2 percent in the approaching holiday season, which is half the 4.4 percent 10-year average per year, according to Jim McConnon, UMaine Extension specialist and professor of economics. Since some retailers depend on the holiday shopping season for about 25-40 percent of their annual sales revenues, McConnon concludes it will be a challenging holiday season for many retailers in Maine.

The hook: A weak job market, high energy prices, tight credit and even a drop in Canadian currency value all are factors convincing nervous consumers to postpone big-ticket purchases, which further inhibits economic recovery, according to McConnon.

Subpar August retail sales in Maine continued a decline in sales in each of the first eight months of 2008, compared with the previous year. In the same period, Maine lost 2,000 jobs, 700 in July alone, McConnon says.

Consumers, however, are expected to continue making smaller, spontaneous purchases, frequently from local businesses, he says.

"I would expect consumers will be shopping earlier than in years past and they'll be looking for more discounts," says McConnon, who adds that retailers are preparing to roll out holiday sales as soon as Halloween, instead of the day after Thanksgiving, in an attempt to lure shoppers and get a jump on the season.

In spite of retail sales performing below expectations in the three major retail drivers – building supplies, general merchandise and automobiles and transportation – holiday sales are still expected to be slightly above last years' figures. "At least we're not looking at a projection of holiday sales to be below last year's," McConnon notes.

The tourism industry, especially important for the state, showed modest increases in lodging and restaurant sales. McConnon adds that Halloween sales are expected to be stronger this year. "During times of stress, this is a way for people to escape their troubles," he says.

Contact information: McConnon can be reached by telephone at (207) 581-3165 or by email at jimm@umext.maine.edu. Additional information, including McConnon's biography, can be found here.

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