US stores hire big with high hopes for holiday shopping

US stores and shippers are ramping up holiday hiring to potentially the highest level in 15 years, but no one is sure whether that will be answered by a burst of shopping.
Package shipper FedEx said Tuesday it would add 50,000 temporary workers for the November-January holiday shopping season, aiming to avoid last year's debacle when it and rival UPS were overwhelmed by the online sales surge, resulting in a huge number of deliveries missing the December 25 Christmas target.
UPS earlier said it was adding up to 95,000 holiday workers to meet what all analysts agree will be another banner season for shipper-dependent online sales.
Added to hiring by stores, that could give around one million more people work for the three-month stretch.
But, a week ahead of the unofficial kickoff to the year-end splurge, views were mixed over whether consumers will open their pocketbooks and unleash their credit cards more generously than last year.
While the steady fall in joblessness and improved consumer confidence point to more spending, wages in the United States have not grown, and household incomes and savings have not significantly improved in the past year.
The National Retail Federation is optimistic, predicting consumers will go on a $617 billion splurge this holiday season, 4.1 percent higher than last year.
"Though we have only seen consumer income and spending moderately -- and erratically -- accelerate this year, we believe there is still room for optimism," said NRF chief economist Jack Kleinhenz.
Others are more cautious, with consultant PricewaterhouseCoopers taking a very pessimistic bent, forecasting a seven percent fall in spending from last year.
PwC's survey showed 84 percent of shoppers planned to spend the same or less this year, citing their flat incomes.
Bankrate.com's pre-season consumer survey backed up PwC's conclusion: respondents said they were limiting spending because incomes have not grown, and they need to add to their savings.
"Sustainable growth in household income is the missing ingredient from this economic recovery, and the leading culprit for why consumers are holding back on monthly spending," said Greg McBride, Bankrate's chief financial analyst.
- Retailers, shippers all in -
But retailers and shippers are not hedging their bets. The season should see retailers add 800,000 temporary jobs, according to outplacement firm Challenger, Gray & Christmas.
That compares to 786,000 last year, and would be the largest holiday surge since 1999, when the economy was in full-growth mode and consumers were spending like mad.
Add the temps being hired by non-retailers like UPS and FedEx, and seasonal jobs could easily top the one million mark.
"The last two years saw holiday hiring return to pre-recession levels," said Challenger.
"Holiday spending will undoubtedly benefit from the fact that payrolls are increasing by an average of 215,000 new workers per month, so far this year. That translates into more people with jobs, which means more holiday spending money."
Yet the signs of where consumer spending is going remain mixed. Americans have been strong buyers of big-ticket items like cars this year. And Apple's new iPhones got a strong reception in September, suggesting consumers are ready to spend on certain things.
Another positive is falling gasoline prices, which could free up household funds for other things.
But elsewhere, households are scrimping, and surveys show caution and a propensity to save.
Few question, however, the hiring bets of UPS and FedEx. Their business is driven heavily by online shopping, which is expected to continue growing strongly.
The NRF predicts online shoppers will spend an average of $932 this season, 16 percent more than other consumers.
Even so, shoppers will keep pricing pressure on all vendors through all channels.
"Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time," said NRF president Matthew Shay.