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No Scrooge Here: Analyst Sees Best Holiday Sales Since 2004

For all the doom and gloom about consumer sentiment and holiday spending, one analyst's forecast calls for the most rapid holiday sales growth since 2004—a benchmark that makes others look like Scrooge.

Shoppers take a break at the Baybrook Mall in Friendswood, Texas.
Getty Images
Shoppers take a break at the Baybrook Mall in Friendswood, Texas.

Retail consultancy Customer Growth Partners expects that American consumers have worked to put their finances in order and are ready to spend. Their forecast calls for holiday sales in the November to December period to rise 6.5 percent from last year to $554 billion.

That's twice consensus forecasts, which have putholiday sales growthbetween 2.5 percent to 3 percent. It also is the fastest pace for retail sales growth since 2004, when holiday sales rose 6.9 percent.

While it's worth keeping in mind that not all forecasters measure holiday sales in exactly the same way, and may not be comparable, this prediction still stands out from the pack.

"American households — at least the 91 percent with jobs — have deleveraged dramatically since 2007, while disposable incomecontinues to rise, generating almost $50 billion a month in incremental free cash flow, even with gasoline price hikes," said Craig Johnson, Consumer Growth Partners president, in a statement announcing his forecast.

"After three years of scrimping and saving, Americans are ready to spend — strategically and smartly — but for the first time in years, very few things will stand between an American consumer and her shopping destination. This will be a very happy holiday for most families — and almost all retailers," he said, in a written statement.

Johnson's prediction is worth watching. He has been very accurate in the past. His estimates look at retail sales growth excluding automobiles, auto parts, gasoline, fuel, food service and restaurants, but including both Internet and direct-to-consumer sales, and he makes his predictions based on reported data from retailers, store and channel check and other research his firm conducts.

There are five key factors contributing to the forecast, Johnson says:

  • Personal disposable income has grown 4 percent from last year.
  • Savings rates have normalized to about 4.5 percent. (In 2009, the savings rate peaked at 8.2 percent.)
  • A decline in the household debt service ratio to 11 percent from 17 percent in 2007.
  • Pent-up consumer demand after putting off discretionary purchases.
  • Consumers are excited about new fashion in stores.

On that last point, Johnson expects sales of apparel during the holiday season to outpace overall retail sales growth, with an increase of 7.6 percent. Sales of luxury itemsalso will do well as will online retailers, dollar stores, and discount retailers.

Johnson also predicts that department stores — from Nordstrom and Saks to Macy's — will see their best holiday in years.

Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.

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