Economist sees positive trends fueling retail sales in 2015

Jack Kleinhenz is in his fourth year producing one of the most anticipated economic forecasts of the year: the National Retail Federation’s holiday sales forecast.

As the NRF’s chief economist, Kleinhenz’s job is to assemble the report that predicts how the final two months of the year will be for retailers across the country.

“On average nearly 20 percent of annual sales for retailers are in November and December,” he said. “So November and December are very important months.”

It’s not an easy task.

“One factor that is always out there that we can’t control is the weather,” Kleinhenz said. “We’re hoping for a good retail season … we don’t want to have the polar express like we did last year … and put a damper on spending.”

Kleinhenz will be in Wichita on Thursday as a featured speaker at the Wichita Area Economic Outlook Conference at Century II, an annual event organized by Wichita State University’s Center for Economic Development and Business Research.

At the conference he will discuss his outlook on national consumer and retail activity next year.

Kleinhenz was contracted to be the NRF’s chief economist in 2010. He lives in Cleveland, where he runs Kleinhenz & Associates, an economic and business consulting firm that he started in 1998. He said he travels twice a month to Washington, D.C., where the NRF is based.

Kleinhenz, who has a doctorate in economics from the University of Notre Dame, also is an adjunct professor of economics at Case Western Reserve University’s Weatherhead School of Management.

And in September he was elected president of the National Association for Business Economics.

Kleinhenz said his focus is on consumer and retail spending.

It’s an area in which he became interested as a sophomore at John Carroll University, where he earned a bachelor’s degree in economics. “The idea of economics and trying to understand human behavior as it comes from the marketplace … fascinated me,” he said.

Kleinhenz started his economics career teaching at Notre Dame, but decided to pursue a job working for the Federal Home Loan Bank in Pittsburgh. From Pittsburgh he returned to his native Ohio to take a job at the Federal Reserve Bank of Cleveland.

He said that when he graduated from John Carroll in 1974, and from Notre Dame in 1981 with his doctorate, the nation was in “very significant” recessions.

But the 2007 recession was much worse.

“While the economy got set back considerably in several other recessions, the recoveries were faster,” Kleinhenz said. “The financial crisis that brought down the economy (from late 2007 to mid-2009) probably hit every corner of the economy more so than what we had realized or occurred in other recessions.”

The housing bubble didn’t help, either. He said that in past recessions one big driver of recovery has been home construction and sales. Because inflated housing values fell so steeply with the recession, leaving many homeowners underwater on their mortgages, the housing industry stalled.

And neither housing sales nor new home construction acted as much of a driver to recovery.

But Kleinhenz said he does see an improving economy.

“We had a setback in the first part of 2014,” he said. “But it’s certainly picked up and offset a large amount of the downturn that occurred in the first quarter.”

“My expectation is we’ll finish out the year somewhere around a 3 percent growth rate in the economy, in GDP (gross domestic product).”

He said stronger employment growth, stronger spending by businesses, an improving housing market and improving personal income growth set the national economy up for a better year in 2015.

“The outlook is good going into 2015,” he said. “I think the economy is improving, and the consumer will continue to be a major contributor.”

This story was originally published October 3, 2014 at 4:43 PM with the headline "Economist sees positive trends fueling retail sales in 2015."