Barclays has put out an interesting note for retailers. They think that as US companies work through the implications of the 2018 tax cuts that they will begin to offer bonuses and wage increases. We have already begun to see some evidence of this with announcements from various companies.
Barclays goes on to say that all this unexpected money will be spent by consumers and they project that the retail sector will likely be one of the main beneficiaries. They base this idea on what happened in 2001 when a previous round of tax cuts occurred and there was a substantial surge in consumer spending.
The bulk of this consumer spending is expected to be on discretionary items, especially more expensive items.
So the message is clear. Prepare for a surge in retail activity that hasn’t been seen in over a decade. Happy New Year!
