Low-income shoppers are feeling better about their finances and are seen fueling a rise in holiday spending this year, a new study has found.
Households with an annual income of less than $50,000 plan to spend $837 on gifts, travel and entertainment this Christmas, up 23 percent from 2015, according to PwC. While households earning more than that amount will shell out substantially more — an average $1,388 — that figure would represent just 4 percent growth.
The wealthiest shoppers plan to rein in their spending, with those households earning $150,000 or more saying they'll spend $1,812. That would be a 3 percent dip compared with last year.
Households earning between $100,000 and $149,999 are seen tightening their grip even more, and are planning to shell out $1,394 — down 10 percent from last year.
PwC's forecast includes spending on restaurants and travel, unlike the National Retail Federation's forecast: On Tuesday it said it expects retail sales excluding automobiles, gasoline and restaurants to rise 3.6 percent in November and December, to $655.8 billion. That would mark an acceleration over last year's 3 percent increase, and would easily top the 10-year average of 2.5 percent growth.
The trade organization's forecast, considered the industry benchmark, is based on an economic model that factors in consumer credit, monthly retail sales and personal income.
NRF anticipates non-store sales, which skew toward digital, will increase between 7 percent and 10 percent, to as much as $117 billion.
"Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit," said Jack Kleinhenz, NRF's chief economist.
Retailers got off to a rocky start in 2016, as last winter's unseasonably warm temperatures left their shelves stocked with coats and scarves. Stores were forced to aggressively discount these items to make way for spring goods, cutting into their margins. Retailers have finally gotten their inventory levels in check, boding well for their profitability this season.
Yet even as more Americans are working and receiving slightly higher paychecks, they've been reluctant to spend on traditional retail goods — namely apparel. Broad-based discounting has also cut into retailers' top lines, requiring them to sell more items to record a gain.
"This year hasn't been perfect, starting with a long summer and unseasonably warm fall," NRF President Matthew Shay conceded. "But our forecast reflects the very realistic steady momentum of the economy and industry expectations."
Like NRF, separate forecasts from Deloitte, AlixPartners, the International Council of Shopping Centers and RetailNext are all calling for growth between 3.2 percent and 4 percent.