RETAIL Online Spending Could Top $124B Over The Holidays

Retail Pundits Reveal Key Spending Themes This Holiday 2018 Shopping Season

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A lot of people will shop for the holidays! And they’ll buy online! And they will look at their phones a lot, too!

Duh.

It’s that time of year again, folks, when we retail reporter types can sometimes spew breathless pronouncements on the sometimes not-so-revelatory predictions pundits make on the make-or-break holiday selling season, when merchants generate a disproportionate chunk of their annual sales.

Here’s some predictions worth noting. Let the games begin.

Feeling Financially Flush, Consumers Will Spend More Than They Have In Five Years

The National Retail Federation expects holiday retail sales in November and December — excluding automobiles, gasoline and restaurants — to rise between 4.3% and 4.8% over 2017, for a total of  $720.89 billion. The forecast compares with an average annual increase of 3.9% over the past five years.

“The combination of increased job creation, improved wages, tamed inflation and an increase in [consumers’] net worth all provide the capacity and the confidence to spend,” the NRF’s chief economist Jack Kleinhenz said, in a statement.

Online retail will be the most popular shopping destination, with 60% of consumers planning e-commerce gifting this holiday season, according to a Deloitte survey.

An estimated 57% of holiday dollars will be spent online, eclipsing in-store purchasing, which is forecasted to account for 36% of consumer spending.

More than 70% of shoppers surveyed noted free shipping, while two-thirds cited time savings and home delivery, as the key reasons they’ll buy online this holiday, the survey found.

Of the nearly 50% of consumers who plan to use their smartphones to shop this holiday, 67% plan to use mobile to make a purchase, up from 57% last year.

Mass merchants are the second most popular venue for holiday shoppers (52%, up from 44% in 2017). Traditional department stores and off-price retailers round out the top-four shopping destinations.

Fewer Baubles And Blouses, More Brunches And Broadway Shows

Over the last five years, U.S. consumers have diverted more of their holiday budgets to experiences such as home entertaining and socializing away from home, which now represent 40%, or $611, of  survey respondents’ planned holiday budgets, the Deloitte study found.

While physical gift purchases, from clothes to household appliances, still dominate holiday purchases, they’re down trending. The number of shoppers who plan to buy a product has dropped 11% from 2017, according to Accenture. By contrast, shoppers planning to buy an experience or service-geared gift, from a meal out and a concert ticket to a cleaning service, rose 5%.

Millennials Will Be The Biggest Spenders, Practicing Conscious Consumption

An estimated 49% of younger Millennials plan to spend more this holiday than in 2017, while only 13% of their Baby Boomer counterparts expect to spend more than they did a year.

And Generation Y’s shopping venues will reflect their belief system. For example, 54% of younger Millennials said retailers have a duty to address broader social and political issues, such as diversity, be it gender, ethnic or disability inclusion, and they will reward merchants that do just that: 51% of younger Millennials surveyed are more likely to shop at a retailer that demonstrates awareness of these issues, the Accenture study found. “Our research suggests that younger Millennials are more likely to choose one brand over another if that brand demonstrates inclusion and diversity in terms of its promotions and offers, their in-store experience, their product range, and their environmental awareness,” said Jill Standish, senior managing director and head of Accenture’s retail practice, in a statement.

I’ve been a business journalist specializing in the retail industry for over a decade, covering consumer news, company profiles and industry analysis pieces, as well as the intersection of business news and shopping, fashion and social trends.

I was the retail and con…

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Retail

5 Things Retailers Need to Consider Heading Into the 2018 Holiday Shopping Season

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For most retailers, the 2018 holiday shopping season will present their biggest opportunity of the year to engage with customers. It will also represent the bulk of their annual sales.

As a result, this time of year is crucial for retailers to achieve success. With that in mind, current conditions make this holiday shopping season look positive for retailers.

1. Consumers Are Upbeat About Spending 

From what we’ve seen, customers are excited about shopping this year.

Brick-and-mortar sales will grow 1.4 percent and online growth is expected to reach 14 percent, according to Forrester Analytics: Online Holiday Retail Sales Forecast, 2018 (U.S.). Various studies also show that the average U.S. consumer will spend more during the upcoming holiday season, jumping from $1,226 per consumer to $1,536.

Deloitte’s annual holiday economic forecast looks great for retailers as well. Consumers seem confident about the economy, their household financial situations, and their spending plans for the upcoming holiday season.

Deloitte’s consumer survey shows online spending continues to grow and is expected to account for 57 percent of all purchases. Also, Deloitte’s research notes that shoppers are enthusiastic about the holiday season and remain price- and value-focused.

Based on the report, retailers are in a good spot to influence where consumers shop this year as many shoppers are entering the season undecided.

2. Thanksgiving is Coming Early

Consumers are doing their holiday shopping earlier based on a study by Bazaarvoice. An early Thanksgiving helps spread the holiday shopping theme to consumers.

Thanksgiving is as early as it can be this year (Nov. 22) which could prove helpful to retailers. Sixty percent of consumers say they begin their holiday shopping before Thanksgiving . This is particularly important this year because there will be 33 days between Thanksgiving and Christmas.

Retailers have that much more time to fully engage consumers this holiday season. Although spending will increase this holiday season, retailers must be conscientious when it comes to identifying their best customers who are most likely to spend the most.

It appears that consumers look forward to spending early for their holiday shopping . This fact, combined with the Thanksgiving retail shopping period that includes Black Friday and Cyber Monday, means brands need to be prepared for this critical holiday shopping period around Thanksgiving.

3. The Strong Economy Will Help Retailers

Consumers are confident about the economy for several reasons. National Retail Federation President and CEO Matthew Shay cited some of these factors .

“Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year,” Shay noted.

Holiday sales in 2017 totaled $687.87 billion, a 5.3 percent increase over 2016 and the largest increase since the 5.2 percent year-over-year gain seen in 2010 after the end of the Great Recession.

“Last year’s strong results were thanks to growing wages, stronger employment, and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said. “With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”

All of these strong macroeconomic factors have contributed to one of the best consumer discretionary spending environments in years .

Consumer confidence in the economy is a powerful thing during the holiday season, which places retailers in an ideal situation to enhance engagement and retention levels.

4. Retailers Can Make the Holiday Season a Memorable One

Retailers can take advantage of the favorable economy and positive consumer sentiment through customer insights data during the holiday season.

Preparation for the holiday season is imperative for retailers. One under-the-radar element of holiday preparation for retailers should be website performance.

Whether it is a brick-and-mortar store or an ecommerce site, online presence marks the essence of every business strategy todayChecking website performance, load time, application performance testing, application load test, and much more are quickly becoming inevitable for commercial success.

All these factors play a vital role, especially during the high-pressure holiday season when every small or big portal is trying to grab maximum profits from the market.

During the holiday season retailers need to ensure that store associates are well versed and excited about the loyalty programs they will be promoting.

5. Customer Engagement Shouldn’t End with the 2018 Holiday Shopping Season

The holiday season is a great time to engage and create new customers, but what happens after that? One of the strategies a retailer can use to achieve this goal is a loyalty program.

There are thousands of loyalty programs out there, but consumers are drawn to ones that are simple and offer real value.

A new study shows  that 40 percent of customers who refrain from signing up for loyalty programs do so because the value of being a loyalty member is not worth the time, money, or effort of signing up. And for those who sign up, 76 percent do so to qualify for special promotions.

Retailers should take note of these statistics and evaluate special offers for loyalty members to ensure that their promotions are competitive and offer value.

Effectively leveraging a loyalty program during the holiday season can go a long way toward retaining customers in the long run. That customer engagement during the holiday season should continue in the New Year to bolster your consumer relationships.

Loyalty program signup is important throughout the year, but it takes on added importance and relevance during the holiday season.

Happy Holiday Shopping Season

If brands listen to their customers, identify their pain points, and meet their expectations, they can build solid two-way relationships that extend well beyond the holiday season.

Given the fact that consumers are upbeat about spending in a strong and vibrant economy, retailers can and should take advantage of the early Thanksgiving and make this holiday season a memorable one through increased customer engagement, more promotions around value-driven loyalty programs, and ensuring that store associates are proficient in your key brand messaging.

Creating memorable moments is a huge part of the holiday season.

Focus on your customers and enjoy a Happy Holiday Shopping Season!

11:06:55 AM EDT By 

Kusama “Infinity Mirrors” and FRONT International helped art museum break attendance, membership records

CLEVELAND, Ohio – Attendance boosted by the popular Yayoi Kusama “Infinity Mirrors” exhibition and the FRONT International: Cleveland Triennial for Contemporary Art this year helped the Cleveland Museum of Art break a 26-year record for the number of visitors attracted in any single summer.

Between July 1 and September 30, the museum said it attracted 305,692 visitors, the largest summer total in the institution’s 102-year history, and the largest since the same period in 1992, when the exhibition “Egypt’s Dazzling Sun: Amenhotep III,” helped the museum pull in 290,000 visitors.

Visitors this summer came from all 50 states and 23 foreign countries, generating $6.9 million in museum revenues, including $2.3 million in new memberships, the museum announced Thursday.

“We were really thrilled to see so many people come from so far away as well as close to home to celebrate the summer with us,” said Elizabeth Bolander, director of audience insights and services at the museum, who described the new information in an interview Wednesday.

The Amenhotep exhibition, organized to celebrate the museum’s 75thanniversary, drew 186,139 visitors, far more than the 120,000 attendees for the Kusama show, which surveyed the artist’s 65-year career.

The museum had to limit the number of attendees for “Infinity Mirrors,” which involved circulating small numbers of viewers in and out of specially constructed mirror rooms in 30-second shifts.

But with FRONT and other exhibitions and a full calendar of events and programs, the museum cruised past its 1992 summer attendance record.

The museum reported that it topped 30,000 memberships this summer for the first time in its history, exceeding the total of 29,491 membership households reached on June 30, 2016, the middle of the museum’s centennial year.

Shows during that period included “Painting the Modern Garden: Monet to Matisse,” and “Pharaoh: King of Ancient Egypt.”

The museum said it created 120 temporary jobs to support the Kusama exhibition, and recruited 100 volunteers.

Data crunched by Cleveland economist Jack Kleinhenz show that the Kusama exhibition contributed $5.5 million in economic impact in Cuyahoga County.

The figure includes $3.2 million in direct spending by visitors from outside Cuyahoga County, plus additional sums calculated for the ripple of indirect and induced spending triggered by the new dollars flowing into the local economy. The increased spending created 58 new jobs in the county, according to the analysis.

Kleinhenz said the data were calculated from 732 visitor surveys, which represented a 33 percent response rate among those polled by the institution.

Figures extrapolated from the survey indicate that 44,522 visitors came to see the Kusama show from outside Cuyahoga County.

“It goes beyond pure economics,” Kleinhenz said of the museum’s impact on Cleveland and Northeast Ohio. “It’s such a unique brand, like the Cleveland Orchestra, the Cleveland Browns and the Cleveland Clinic.”

Bolander said the summer of 2018 helped the museum understand how its recently expanded and renovated complex could accommodate a million visitors a year – a major goal of a new strategic plan unveiled in 2017.

Attendance has averaged 630,000 in recent years. Attendance this summer – if annualized – would nearly double that number.

“It was actually very exciting this summer,” Bolander said. “We were able to test if, you will, what it meant to be at that level of attendance for a sustained period.”

By Steven Litt, The Plain Dealer

Retailers Should Have a Happy Holiday Season

Barrons Vito J. Racanelli

The Amazon threat still hangs over many bricks-and-mortar retailers, but the coming holiday season should be a happy one for most, according to projections from the National Retail Federation.

The NRF said Wednesday it expects retail sales in November and December—excluding automobiles, gasoline and restaurants—to increase between 4.3% and 4.8% over the year-ago period, or to about $717.5 billion to $721 billion, says NRF chief economist Jack Kleinhenz. The sales rise projected compares with an average annual holiday season gain of 3.9% over the past five years.

Could the tariffs ruin the holidays for shoppers?

October 3

“Get out the Ouija board.”

That’s how one retail analyst summed up the tricky task of predicting what lies ahead for retailers and shoppers this holiday season. Analysts say there’s ample reason to expect record-breaking sales on the back of a strong economy, a historically low unemployment rate and upward-ticking wages.

But that’s all hedged by a hefty unknown: the threat of ongoing tariffs and an escalating trade war. President Trump’s latest round of tariffs have kicked in at 10 percent and are set to rise to 25 percent at the start of 2019. Nearly 6,000 products — including electronics and other go-to gifts — will see price increases that, in time, are expected to pass from retailers to consumers.

And while it’s unlikely that the brunt of those price hikes will take a toll over the next few months, experts agree that the sheer concern over how long the tariffs will last, and to what degree, could act as a Grinch to holiday shoppers.

“Business doesn’t manage uncertainty well, nor does the consumer, and there is no way prices don’t get passed through the consumer,” said Mark Cohen, director of retail studies at Columbia Business School. “The problem I have is, who knows on a day-to-day basis where this is headed?”

The retail industry is still optimistic. On Wednesday, the National Retail Federation announced it is expecting retail sales in November and December to increase between 4.3 and 4.8 percent over 2017 results, to as much as $720.89 billion. That forecast compares with an average annual increase of 3.9 percent over the past five years. (If Labor Day is any indicator, Americans spent a record $2 billion online then alone.)

But for comparison, holiday sales in 2017 rose 5.3 percent over the year before, totaling $687.87 billion, according to the NRF.

In mid-September, Deloitte anticipated retail holiday sales to increase 5 to 5.6 percent over last year’s shopping season — totaling at least $1.1 trillion between November and January. Rod Sides, leader of Deloitte’s U.S. retail and distribution practice, said shoppers are unlikely to make their shopping decisions based on geopolitical issues, such as global trade.

“A lot of it comes down to when they look in their checkbook or their pocket,” Sides said. “If they have a few extra dollars, whether it be the stock markets to the election to tariffs, it typically doesn’t trickle down.”

At the same time, retailers and industry groups have made their opposition to the tariffs clear. Last month, Walmart sent a letter to U.S. Trade Representative Robert E. Lighthizer cautioning that additional tariffs on $200 billion of Chinese goods would strike a blow. Walmart — the largest retailer in the country — wrote that the “immediate impact will be to raise prices on consumers and tax American businesses and manufacturers.” Target chief executive Brian Cornell said the company was “concerned about anything that would cause higher prices on everyday products for American families.”

That’s in concert with arguments from industry groups that say the tariffs will trigger price increases, even if not by this Thanksgiving or Christmas. The Retail Industry Leaders Association, an industry lobbying group, wrote to Lighthizer in September requesting the removal of more than 650 tariff lines from the proposed list of products subject to the latest wave of tariffs. Any tariffs on consumer goods proposed by Trump’s administration, the group wrote, are “nothing more than a hidden tax.”

Larger retailers have long since secured low-priced inventory to get them through the holidays and into the new year. But Hun Quach, vice president for international trade at RILA, noted that as the Chinese tariffs drag on, businesses large and small will be forced to restructure their supply chains. Changing the source on products as simple as plastic stickers can take as long as a year, she said.

“The pricing impact won’t hit immediately,” she said. “I think a lot of this uncertainty is about how long these tariffs are going to be in place.”

There’s also the question of whether retailers, embracing a strong economy and shoppers with money to spend, could increase prices anyway. But Cohen said that, even with signs pointing toward a strong holiday season, “the prospect of raising prices across the board is extremely problematic. There’s no getting away with that.”

Still, retailers will have to grapple with questions of when to time price increases on goods that will feel the full brunt of the tariffs at the start of 2019.

“Do you start to adjust prices now or do you wait until January?” Cohen said. “That’s a difficult decision.”

Mark Rosenbaum, department chair and professor of retailing at the University of South Carolina, said that many retailers placed their holiday-season orders over the summer, and that it would be unusual for them to alter the prices now because of the tariffs.

Jack Kleinhenz, chief economist at the National Retail Federation, noted that many of the tariffs apply to goods that have “already been ordered, and have been shipped and are on their way.” The “precise effects of the tariffs are not yet completely clear,” but any impacts are likely to hit closer to the start of 2019. The tariffs may hit prices for jewelry by Valentine’s Day, for example, but that may be the earliest shoppers will feel a difference.

In the meantime, retailers and shoppers will have reason to stay merry.

“Thinking about the ability to spend — the data shows that we are in a good place,” Kleinhenz said. “The picture looks very good.”

U.S. retailer group sees 2018 holiday sales up more than 4 percent

NEW YORK (Reuters) – U.S. holiday sales in 2018 will increase 4.3 percent to 4.8 percent boosted by a strong economy but will be slower than a year ago when consumer spending surged to a 12-year high, according to a forecast from a leading retail industry group.

The National Retail Federation (NRF) said holiday sales growth will be higher than an average increase of 3.9 percent over the past five years but slower than the 5.3 percent growth witnessed a year earlier when consumer spending grew the most since 2005 and was boosted by tax cuts.

“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said.

“With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy,” he said.

The combination of more jobs, improved wages, tamed inflation and an increase in net worth all provide the impetus to spend, he added.

The retail trade group said it expects sales for the last two months of the year between $717.45 billion and $720.89 billion, excluding autos, gasoline and dining out. Holiday sales in 2017 were $687.87 billion.

NRF’s forecast is one of the most closely watched benchmarks ahead of the holiday season, when retailers like Amazon.com Inc, Walmart Stores Inc and Target Corp generate an outsized portion of their profits and sales.

The last two months of the year can account for 20 percent to 40 percent of annual sales for many retailers.

The NRF forecast follows other estimates from companies like AlixPartners, which says sales will grow in between 3.1 percent and 4.1 percent as “2017 will be a tough year to follow.” Forecasts from companies like Deloitte and PwC expect holiday retail sales to grow around 5 percent.

NRF also said Wednesday that it expects seasonal employment by retailers to reach between 585,000 and 650,000 jobs, up from 582,500 in 2017.

Shoppers expected to give retailers a holly, jolly holiday season as they buy a bit more

, USA TODAY Oct. 3, 2018

Shoppers, buoyed by low unemployment and a slight uptick in wages, should make this a jolly holiday season for retailers, an industry trade group predicted Wednesday.

The National Retail Federation, an industry trade group, forecasts that sales in the last two months of this year should rise between 4.3 to 4.8 percent as compared to the holiday period in 2017.

Not counting purchases of cars, gas, or meals at restaurants, shoppers are expected to spend between roughly $717 billion and $720.89 billion in sales this year. The sales increase also tops the 3.9 percent average annual uptick the industry has seen in the last five years.

The forecast underscores the message from many retailers that the brisker sales they’ve reported in recent quarters are not a fluke. Shoppers spent $687.87 billion on purchases during last year’s holiday season, a 5.3 percent bounce over the previous year, and the biggest bump since 2010.

“Our forecast reflects the overall strength of the industry,” Matthew Shay, NRF’s president and CEO said in a statement. “Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year. While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”

Giving gifts is great, especially if you can borrow the present later for yourself. Buzz60′ Tony Spitz has the details. Buzz60

National unemployment stands at 3.9 percent, close to an 18-year low. “The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend,” said Jack Kleinhenz, NRF’s chief economist.

NRF expects that overall retail sales for this year to be at least 4.5 percent higher than 2017.

CNBC FED SURVEY: FED EXPECTED TO HIKE RATES TWICE MORE THIS YEAR AND THEN RISK A ‘POLICY MISTAKE

CNBC

Fed expected to hike rates twice more this year and then risk a ‘policy mistake’: CNBC survey

  • Nearly all respondents to the CNBC Fed Survey see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent.
  • In addition, 96 percent believe another quarter-point hike is coming in December.
  • About 60 percent see the Fed eventually raising rates above neutral to slow the economy.

Steve Liesman | @steveliesman

Look out for two more rate hikes this year from the Federal Reserve to go along with economic growth nearing 3 percent and a central bank that eventually raises rates explicitly to slow growth, according to respondents to the latest CNBC Fed Survey.

A full 98 percent of the 46 respondents, who include economists, fund managers and strategists, see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent. And 96 percent believe another quarter-point hike is coming in December.

“Fed funds increases in September and December are as certain as certain can be,” John Donaldson, director of fixed income at Haverford Trust, wrote in his response to the survey. “Their real challenge starts after the first increase in 2019, which will bring the rate to 2.75 percent, or finally back to even to inflation.”

Respondents see the funds rate rising by two more quarter points (50 basis points) in 2019, which would bring it to a range of 2.75 to 3 percent. After that, divisions set in, with about half the group seeing a third hike in 2019.

About 60 percent of the group see the Fed raising rates above neutral to slow the economy. The average that respondents see the funds rate eventually ending this hiking cycle is 3.3 percent.

“This means that the U.S. bond market will reach a decision point sometime in the next year, when market participants will have to decide whether the Fed will go beyond current market pricing,” said Tony Crescenzi, executive vice president at Pimco. “If and when it does, U.S. Treasuries will move higher.”

A fifth of the group say a “fed policy mistake” is one of the biggest threats facing the expansion, second only to trade protectionism.

“We are in jeopardy of watching trade and monetary policy plunge into a head-on collision, with no one wearing seat-belts, and the airbags have been disabled,” wrote Art Hogan, chief market strategist at B. Riley FBR. “The biggest risk in the market is a policy mistake, and we are working on a two-for-one special.”

Respondents support President Donald Trump‘s handling of the economy by a 61 percent to 30 percent margin, unchanged from the July survey. But 59 percent say his trade policies will reduce growth, and 52 percent say they will lower employment in the U.S.

A slight 53 percent majority also say the president’s negotiating tactics will lead to better trade agreements for the U.S., while 20 percent say they will be worse and 22 percent expect them not to change much.

Overall, the tariff effects on the economy are seen as modest. Among those who see negative effects, the average is just a 0.2 percent decline for GDP in 2019 and a 0.2 percent higher inflation.

But some see more substantial effects.

“The president should be remembered for his cuts in regulations that served the economy so poorly for years but instead will be remembered for his illogical, un-economically justifiable support for trade protection and tariffs. How sad is that?” wrote Dennis Gartman, editor and publisher of The Gartman Letter.

Strong economic growth ahead

But forecasts suggest the president has some room for his trade policies to subtract from growth without doing enormous economic damage. Respondents look for GDP year over year to be up 2.8 percent in 2018, versus 2.2 percent in 2017, and up 3 percent in 2019, defying the general belief in a slowdown next year predicted by many economists.

Inflation is seen ticking up to around 2.5 percent this year and next, while the unemployment rate is forecast to fall to 3.7 percent by 2019.

“Rarely are so many economic gauges of the U.S. economy so strong — including employment, income, retail sales, business spending, manufacturing and small business,” wrote Jack Kleinhenz, chief economist for the National Retail Federation. “The near-term outlook appears to be steady as she goes.”

Respondents see a low 14 percent probability of a recession in the next 12 months.

Stocks are seen growing, but slowly. The average forecast predicts the S&P 500 will rise to 2,956 this year and end 2019 at 3,038. While it would break the 3,000 level, it would represent just a 4 percent gain over the next 15 months.

Treasury yields are seen ending this year at 3.15 percent and 3.45 percent in 2019, suggesting much of the Fed tightening is priced into the bond.

The price of rising employment: Slow wage growth, trade risks

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained.

A slowing rate of job growth in July nonetheless managed to pull some workers off the sidelines, but wage growth mired at 2.7 percent began to elicit concerns that wages will fail to keep up with inflation as the economy picks up steam.

At 157,000, the number of jobs created last month fell short of expectations, but upward revisions of the previous two months and a broad base of new jobs across industries left economists relatively sanguine about the miss.

“I don’t think you want things to be ‘great’ because great means the Fed worries about inflation and the economy moving ahead too quickly,” said Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute. “The expansion killer is the Fed making a mistake, moving too fast. We don’t want to see great right now. We just want to see good.”
Upward revisions to May and June added a combined total of 59,000 jobs added, bringing the monthly average to 224,000 over the past three months.  “In the past, summer months tend to show large employment fluctuations due to the timing of seasonal hiring,” National Retail Federation chief economist Jack Kleinhenz said in a statement. The retail sector eked out a small gain of 7,000 despite a loss of 32,000 jobs, largely due to the closure of the Toys R Us chain.

 

The labor market sectors with the most notable growth in July were professional and business services, which added 51,000 jobs; and manufacturing and healthcare/social assistance, which added 37,000 and 34,000 jobs, respectively.

“U.S. manufacturing is flexing some muscle right now,” said Mark Hamrick, senior economic analyst at Bankrate.com, but noted these and other labor market gains could be threatened by President Donald Trump’s protectionist sentiments. “Obviously, there are huge risks associated with the trade dispute,” he said.

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

“I don’t think we’ve seen the brunt of the tariffs yet,” said Arne Kalleberg, professor of sociology at the University of North Carolina at Chapel Hill. Manufacturing and agriculture-related jobs would be especially at risk if China or the European Union enact retaliatory sanctions, he said.

Derailing the current labor market expansion could hurt the most at-risk members of the workforce the most and slow mediocre wage growth even further, even as rising inflation erodes the value of Americans’ pay.

“We have to think about the fact that inflation’s running at a 2 percent rate,” Hamrick said. “We’re on this rising interest rate trajectory.” If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

Economists say demographics are one factor behind wage growth that trails what most experts consider the low end of healthy wage growth by nearly a full percentage point. As baby boomers leave the workforce, the younger and generally less-experienced workers taking their place don’t earn as much.

A yawning skills gap is another. Economists say a robust economy is drawing people back into the workforce, but this could be one of the factors holding down wage growth. “What businesses are having to do is they can’t find people with skills, so they have to hire them at unskilled wages and then train them,” said Dan North, chief economist at Euler Hermes North America.

The data bears this out: Compared to the topline unemployment rate of 3.9 percent, the broader U-6 measure of unemployment fell three-tenths of a percentage point to 7.5 percent in July, a percentage point lower than it was a year ago.

“Of course, the people hired without skills have lower productivity,” North added. The upshot is that unskilled workers aren’t being paid as much, which economists theorize could be holding down wage gains.

With fewer skills and lower productivity, these would be the workers most likely to lose out if companies have to start cutting jobs in response to a trade war-initiated slowdown. “I always worry about the quality of these jobs,” Kalleberg said. “There’s very little bargaining power on the part of workers.“

by Martha C. White / 

NBC News