Dec. 2, 2005--Buoyed by reports of brighter economic conditions, shoppers hit stores -- and their computer keyboards -- in record numbers over the Thanksgiving weekend, giving business owners reason to be optimistic for the months ahead, retailers and trade groups said this week.
Despite uncertainties caused by devastating storms in the Gulf region, including wild swings in energy prices and plummeting consumer confidence in recent months, small business owners are "looking at their prospects for the future, and they like what they see," said Nigel Ives, a vice president of the National Federation of Independent Business, the nation's largest small-business lobby group.
A joint NFIB-VisaUSA study released Thursday showed one in three small business owners surveyed last month felt conditions in their market were "good." Nearly half reported solid sales growth, while 57% anticipated higher sales prospects over the next three months, the study showed.
The upbeat mood might be rubbing off on consumers. On Tuesday, the Conference Board, a private research group, reported a turn around in consumer confidence, which had sagged in the months since Hurricane Katrina slammed into the Gulf Coast Aug. 29. The board's monthly index for November, based on a survey of 5,000 households nationwide, jumped 13.7 points to 98.9, from 85.2 the previous month. Lynn Franco, director of the board's consumer research center, said the combined impact of deadly storms and higher gas prices earlier in the fall was "wearing off just in time for the holiday season."
"With gas prices falling, there is every chance that next month will see confidence returning to its summer levels or even hitting new highs, signaling strong spending in Q1," Ian Sheperdson, chief economist at New York-based research group High Frequency Economics, said in an e-mail.
Already, consumer spending in October increased 0.2%, alongside a 0.4% hike in personal income, the Commerce Department said Thursday. In a separate report, the agency said consumer spending, which accounts for nearly three quarters of Gross Domestic Product, rose at a 4.2% annual pace through November.
Spending over the so-called Black Friday shopping weekend alone reached $28 billion, a 21.9% increase over last year, according to the National Retail Federation. Some 60 million shoppers hit stores Friday, about 7.9% more than the same day last year -- with 60.7% shopping at discount outlets, 47% at department stores, and 41.2% at smaller specialty stores, the NRF said.
Online retailers gave an added boost to kickoff this year's holiday shopping season. According to ComScore, which tracks online retail sales, consumers spent more than $925 million online over the Thanksgiving weekend, a 26% increase over last year. Overall, online sales are expected to exceed $19 billion this holiday season, the group said.
Online and off, the upswing in confidence and spending was underpinned by signs of growing strength in the economy, government reports showed this week -- pointing to what NFIB chief economist William Dunkelberg has called "a solid growth path" for small business in the months ahead.
On Wednesday, the Commerce Department reported that the economy grew by 4.3% last quarter, its fastest pace since January 2004. Excluding food and energy, prices rose 2.1% between July and September, the agency said, about the same rate as the previous quarter. Gross Domestic Product, the value all goods and services produced in the U.S., climbed to $11.2 trillion.
On Thursday, the Labor Department said the number of unemployment claims last week dropped to pre-Katrina levels, by 17,000 to 320,000. Amid signs the housing market is cooling off, the U.S. Department of Housing and Urban Development reported Tuesday that new home sales jumped by 13% in October, with median sales prices hitting $231,300.