Merry news for retailers

Government data released Nov. 24 suggests that the economy may be showing new signs of life.

According to the figures, consumers are spending more and earning more, and companies are laying off fewer workers and reporting increased profits.

Consumer spending was up 0.4 percent in October, up from a 0.3 percent rise in September, according to the Commerce Department.

In addition, after incomes saw no growth in September, they were up 0.5 percent in October, with a 0.6 percent rise in wages.

Also, applications for jobless benefits have decreased in four of the past six weeks. Jobless claims dropped by 34,000 to 407,000 in November, according to the Department of Labor.

But not all the new data was welcomed, with sales of manufactured goods down, and new-home sales near record lows.

Economists believe that these data show that the fate of the economy is increasingly resting in the hands of the consumer.

"Households are spending more, and that may signal they are starting to feel better about economic conditions," Joel Naroff of Naroff Economic Advisors told the Associated Press. "It is the consumer that holds the key to the recovery and it looks like households are starting to turn the lock."

"Households have started to pick up the baton of growth from businesses," Paul Dales, U.S. economist at Capital Economics, told the AP. "Whether or not households will be able to shoulder the burden of growth on their own is another matter."

Retailers depend on the holiday shopping season to stay in the black for the year. November to December shopping can account for up to 40 percent of retailers' revenue and profits for the year.

Market research firm ShopperTrak is predicting that holiday sales will grow 3.2 percent, in contrast with the 0.4 percent sales drop in 2009.

University of Maryland students said they are willing to spend more this year than they were last year.

"I'll probably spend about $200 this year, and I'm going to buy for my friends and my family," said Caitlin Verta.

One signal that consumers may be willing to spend this season came when analytics firm comScore said that online spending in the US will be up 11 percent from 2009.

In the first 21 days of November, $9.01 billion was spent on e-retail, excluding travel, auctions and large corporate purchases.

ComScore Chairman Gian Fulgoni said in a press release that he believes this is a sign of an overall consumer willingness to spend.

"Despite continued high unemployment rates and other economic concerns, consumers seem to be more willing to open up their wallets this holiday season than last. While this early spending surge reflects, in part, heavy promotional activity on the part of retailers occurring earlier this season, it is nevertheless a very encouraging sign," said Fulgoni.