The National Retail Federation increased its forecast for holiday sales to 3.8%, which would mean a total of $469 billion for November and December. That is up from its earlier 2.8% prediction. The news bodes well for Q4 GDP improvement. Only two months ago, many economists believed that the GDP increase for the last quarter of the year would be 2% or lower. Many experts have revised that number to 3% or better. The concern today is whether the consumer can sustain that activity into 2012, particularly if tax cuts are not extended and Americans find themselves with less discretionary income.

Sluggish Manufacturing

The eurozone’s PMI rose very slightly to 46.9 from 46.4 in November. China’s was 49.0, up from 47.4 last month. Each figure continues to signal a manufacturing contraction. China’s contraction probably is due to a lower demand for its goods in recession-plagued economies. Its own middle class may have cut consumption on worries that the economy has slowed. The European number is one more sign that the region, perhaps with the exception of France and Germany, has entered a new period of GDP downturn.

Europe and the Internet

The internet may be nearly ubiquitous in the U.S. and parts of Asia. The same is not true in Europe, particularly in nations that are financially troubled. The region’s large research firm, Eurostat, released data that show 100 million people in the EU have never been on the internet. There is a great divide, with economically strong nations like Sweden and Norway having a 90% penetration of internet use. But less than half of the people in Greece and Portugal have been online. Researchers in the U.S. often have contended that the internet is a critical tool for productivity and access to information. If so, the ability of nations like Greece to pull themselves out of recession will be exacerbated by an inability to use the most important modern tools for communication and education.

Lumia 710 Launches

Nokia (NYSE: NOK) has launched its new smartphone, the Lumia 710, in the U.S. The handset runs on the Microsoft (NASDAQ: MSFT) Windows mobile OS, which so far has only a tiny market share in an industry dominated by Apple’s (NASDAQ: AAPL) operating system and Google’s (NASDAQ: GOOG) Android. The Lumia 710 will cost only $50 with a subscription to the service of its launch partner T-Mobile. Experts question why Nokia did not bring out its more powerful Lumia 800 model first to create the best impression possible with potential customers. It is also a mystery why the 710 will be released by T-Mobile, the weakest of the large U.S. carriers and one in the difficult position of an aborted buyout by AT&T (NYSE: T).

Douglas A. McIntyre

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