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Holiday Shopping Events Spell Good News for the U.S. Economy

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Today marks the end of holiday shopping events for the year. The big three: Black Friday, Cyber Monday and Green Monday, are all behind us and today's Free Shipping Day is the final event of the season. Among economists and retail organizations, the general consensus is: So far so good.

The National Retail Federation yesterday predicted a 3.8% increase in holiday retail sales for a record of almost $470 billion. This forecast is up from their previous prediction of 2.8% last month.

NRF President Matthew Shay said about yesterday's report:

After strong sales reports in October and November, along with a successful Black Friday weekend, retailers are cautiously optimistic that this season will turn out better than initially expected, bringing added stability to our recovering economy at a time when America needs it most. (source)

Mr. Shay told Reuters the reason behind the brighter outlook is that consumers simply have more shopping to do. Today is the day more than 2,500 online merchants offer these last-minute shoppers one more chance to get guaranteed delivery of their purchase by Christmas. From mom-and-pop shops to the biggest online brands, merchants are offering free shipping and deep discounts to sweeten the deal.

Free Shipping Day was started four years ago by young entrepreneur, Luke Knowles. A self-proclaimed procrastinator, Mr. Knowles recognized that many Americans delay their holiday shopping until the last possible minute. This meant that online sales usually peaked around December 10th each year because many shoppers feared that gifts purchased any later may not arrive in the mail on time.

Knowles figured if stores could guarantee delivery before Christmas for orders placed as late as mid-December, it would give online merchants an opportunity to catch last-minute shoppers who may have otherwise driven to the mall and big box stores. Free shipping, guaranteed on-time delivery, and deals like 25% off have turned out to be just what the online stores needed to convince shoppers to start adding items to their carts.

In 2010 comScore released some impressive numbers about online shopping holidays. The four main events - Black Friday, Cyber Monday, Green Monday and Free Shipping Day - were collectively responsible for more than $900 million in online sales. This year has been even better. According to Search Engine Watch, this Cyber Monday was the biggest online spending day in U.S. history, rising 33% over 2010 sales. ComScore chairman, Gian Fulgoni estimates that Cyber Monday reached a record $1.25 billion this year. (source)

While encouraged by the retail season's trend of increased sales so far, Forbes.com contributor, and President and CIO of Hennion & Walsh Asset Management, Kevin Mahn remains cautious about how successful the season will be after businesses factor in lower margins from deep discounts. According to Mr. Mahn, "Despite the initial Black Friday/Cyber Monday headline numbers, I believe that American consumers are trying to live within their means this holiday season".

And that may by the most encouraging economic sign of all.