San Francisco -- A report released Thursday by Kurt Salmon Associates said that, while consumer confidence remains shaky, retail sales should see a modest increase through the holiday season, boosted by broadened growth in personal consumption.
Specifically, the report predicts personal consumption expenditures to grow between 2.1% and 2.6% for the final quarter of 2010.
"Now, a year and a half into the recovery, we are seeing discretionary spending picking up," said Todd Hooper, Kurt Salmon partner and retail expert. "While high unemployment is preventing some consumers from taking part in the emerging recovery, we still expect the improved discretionary spending to translate into modest year-on-year gains for retailers."
High unemployment continues to drag down consumer confidence, which remains below pre-recession levels and which declined slightly in August and September. Kurt Salmon's analysis also reveals that while consumers are ready to spend more, their new purchasing habits are not yet set.
"Consumers are still settling into their post-recession spending rhythm," Hooper said. "They know they have to adjust their spending, but they are still sorting out priorities. During this transition, they are not able to consistently anticipate how their spending will change for any given category."