Key messages

• Seasonality: The US retail sector historically performs well from November through to the end of the following April.
• Lower gasoline prices, a strong job market, and above-average real wage growth boost consumer confidence and spending power.
• A recent Gallup survey indicates Americans plan to spend nearly 10% more on Christmas presents this year, with many willing to spend over $1,000.
• Despite underperformance earlier in the year, the sector's current valuation is attractive, suggesting potential for positive surprises during the holiday season.