With the leaves starting to turn and the holiday season just around the corner, retailers are gearing up for their biggest time of the year. But so far, the outlook for this season is looking more "bah humbug" than "ho ho ho." Consumer sentiment slipped for the second straight month in September to 77.5, down from 82.1 in August. That marks the lowest sentiment number since April--not something retailers want to hear with the Christmas shopping season just around the corner. Some of the issues cited in the lower sentiment are concerns about a government shutdown and rising debt in Washington, D.C., signs of rising interest rates in the housing market, and stagnant job growth.
The news may not be as bad as it sounds, though. Betsy Gelb, professor of business and marketing at the University of Houston, notes that sentiment doesn't necessarily equate with spending. "If you have some reason to believe that despite your current dollar situation it's going to get a whole lot better, then consumer confidence zooms," she tells KTRH. Indeed, consumer spending has actually increased slightly this summer while sentiment fell. Gelb explains that sentiment is much more difficult to measure, because it is psychological. "It isn't just about financial resources," she says. "It's about feeling that the prudent thing to do is not go all out this year, and I believe that is what you are seeing."
Despite the drop in consumer sentiment, overall retail sales are projected to rise slightly for this holiday season compared to last. ShopperTrak predicts a 2.4% rise this year, down slightly from the 3% year-over-year increase in 2012. However, Gelb thinks this year's holiday season could get a major boost from the recently released iPhone 5s. "That is the one product that I could see helping to build Christmas spending," she says.