Lack of Market Confidence Isn't Expected to Slow Holiday Spending

Retail Sales Growth Belies Historic Comparison

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Nov 22, 2011, 03:00 ET

ST. LOUIS, Nov. 22, 2011 /PRNewswire/ -- It's here – Black Friday: the official start of the holiday shopping rush. A retailer typically makes around 20 percent of their annual sales during the four weeks of the holiday season. Are consumers planning to hold back their spending due to the lack of confidence in the market? Contrary to historic trends, consumer spending is no longer taking its lead from confidence in the market, or lack thereof. Going back as far as 1996, consumer confidence and retail sales growth followed each other hand in hand. Based on a report from the US Census Bureau, beginning in late 2010 that match has taken a dramatic shift.

"Tepid consumer confidence would have implied negative sales growth at recession-like levels; however, retail sales activity has climbed about seven percent over the last 12 months," according to Jack Ablin, Chief Investment Officer, Harris Private Bank. "Perhaps this is due to fewer households accounting for the bulk of retail sales. At last count, the top 20 percent income earning households control nearly half of all retail activity. This suggests that Christmas sales this year will likely beat economists' forecast, albeit through fewer and fewer households."

Regardless of how much or how little a family spends over the holidays, financial management basics are critical.

"It's important that families put a budget in place and track their holiday spending to avoid over-extending – which can happen pretty quickly this time of year," says Dave Lindstrom, Senior Vice President, M&I, a Part of BMO Financial Group. "Online banking features, including tools found on both M&I and Harris bank websites, allow consumers to set spending limits and get immediate insights into whether or not they are staying on track."

To help shoppers make sense of their money, avoid overspending and save more this holiday season, Lindstrom offers the following tips:

Set a Budget and Stick to It – Build your budget as early as possible and revisit it often to lessen the impact of the holiday spending surge. Using online money management tools to set and track spending limits can help keep you on track.
Get a Head Start – Begin your shopping early. By waiting until the last minute to get your holiday shopping finished, you risk over-spending, going over budget and sometimes missing out on the gifts at the top of your list.
Spend Smart – Get the most out of your purchases this holiday season by using a credit or debit card that offers rewards. This way you get rewarded for purchases you would make anyway.

About BMO Harris Bank

Based in Chicago, BMO Harris Bank has approximately 700 branches and approximately 1,350 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial institution with 1,600 branches, a retail deposit base of approximately $180 billion.

SOURCE BMO Financial Group