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All Signs Saying Go for Holiday Shopping

Economy: Citing consumer confidence, retailers and forecasters expect a strong season.

November 20, 1998|DON LEE and KEN WOO | TIMES STAFF WRITERS

Maggie McKonnell admits to feeling uneasy about her bank teller job and the economy. But just a little, she says, not enough anyway to stop her from spending more for Christmas this year. "I have more people to buy gifts for," she explained as she searched for bargains in Montebello Town Center.

McKonnell, 29, may reflect the mood of a lot of consumers these days. A bit nervous, yes. More cautious, certainly. But with their hands stuck in their pockets? Not in the least.

With the official start of holiday shopping a week away, early signals from shoppers and interviews with mall operators, store managers and analysts all suggest that retailers in Southern California are headed for a robust holiday season.

Tony Cherbak, a retail specialist at Deloitte & Touche's Orange County consulting practice, already sees the momentum building from his 12th-floor office on Bristol Avenue in Costa Mesa, where he has a panoramic view of the parking lot at upscale South Coast Plaza.

The mall was packed on Veterans Day, and Cherbak thinks county retailers will have a very strong fourth quarter, although it will be hard to match last year's nearly 9% increase.

Deloitte & Touche's national survey on holiday spending almost two months ago suggested that Southland consumers would not be spending freely this winter.

But Cherbak thinks retailer and consumer sentiments have turned decidedly more optimistic in recent weeks, bolstered by the stock market rebound, signs of a surprisingly resilient national economy and, mostly recently, the Federal Reserve's interest rate cut this week, the third in two months.

"I think we're looking much more optimistic," Cherbak said Thursday evening, after spending the day talking with retailers.

It appears expectations for consumer spending during the holidays have risen throughout the nation.

"The upcoming holiday season has all the trimmings of being a blockbuster," said Lynn Franco, associate director of the Conference Board. The New York group Thursday released a survey that projects U.S. families will spend nearly $500 on Christmas gifts, 7% more than last year. Franco attributed that to the nation's unusually low inflation and rising wages.

The Conference Board's projection is much higher than some other survey-based forecasts. But there is widespread agreement that regardless of how well the Pacific region performs over the holidays, more vigorous Southern California should do as well as the national average, if not better.

Job growth and housing sales in the Southland have outpaced the country, and consumers have been spending heartily all year long. "We're going into the fourth quarter with a 10% increase through September, which is spectacular," said Cindy Chong, general manager of the Glendale Galleria, which has 250 stores.

Statewide, taxable retail sales this year have been running at nearly 6% higher than last year, more than a percentage point above the nation, says California's Finance Department. Led by Orange and Riverside counties, the state is widely expected to close out the year on a strong note.

Holiday Sales Are Closely Watched

"California seems to have a lot of growth momentum," said Ira Silver, chief economist at J.C. Penney Co. in Plano, Texas. Silver expects a 4%-5% increase in Christmas sales for the U.S., but higher in California.

Holiday sales, while having become less important to retailers in recent years, still account for a third of many merchants' annual revenue. And this year, Christmas spending is being watched very closely, because its outcome could be critical to the national economy. Two key engines of growth, business investments and exports, have faded this year amid global financial turmoil, but brisk American consumption has helped lift the U.S. and worldwide economy.

Confidence among Americans still appears to be shaky but high, at least by historical standards. The latest study by the University of Michigan found renewed optimism in November, reversing several months of declining confidence upon the stock market's summertime plunge.

Robert Eagleton, 68, hardly felt like buying anything three months ago, when his retirement income was shrinking with the stock market. But this week, the former stock broker was already splurging at the Century City Shopping Center & Marketplace, to play Santa Claus to his 11 grandchildren.

"I'm going to spend more this year because I've got two more grandchildren," he said proudly, as he raised two shopping bags, stuffed with kids' pajamas and clothes, a plush elephant sticking out of one bag. "I think everything's back on track," he said.

Not everybody would agree.

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