24/7 Wall St.

There are two theories about what will driven consumer spending. On the pessimistic side, the trade war with China will raise consumer prices and cost jobs in some parts of the country. On the other side, unemployment is low, and consumer sentiment is high. Based on new research , the optimists will win out.

Gallup takes a poll every October and November to test what people will spend on the Christmas holiday. The 2019 figure is one of the highest on record. Americans say they will spend $846 on holiday gifts, up $52 from last year. The number is slightly below the level in 2017 ($862), and 2007 ($866), the year before The Great Recession. In 2008, as the economic collapse hit, the figure fell to $616). The poll was in the field from November 1 through November 14.

The number of big spenders is also near a record level. Gallup experts reported: “In this year’s survey, 34% of Americans say they plan to spend $1,000 or more on holiday gifts, which, along with 2006 and 2017, is one percentage point behind the highest percentage at that threshold, from 1999.” The people who they will spend more this year than in 2018 will spend an average of $1,068 this year.

Economists continue to argue over whether China tariffs will hit consumer prices in December and erode holiday spending forecasts. So far, the biggest retailers who have posted forecasts have rarely mentioned this as a headwind.

The forecast will help some retailers who have already been successful this year. At the top of most lists are Walmart and Target, the two largest big box retailers each of which posted strong earnings last quarter are expected to do so again in this one. On the other hand, a large number of retailers which include Macy’s, Kohl’s, and J.C. Penney expect dim sales over the course of the holiday.

For a look at the broader retail market see 24/7’s 20 fastest growing retailers in the world.