U.S. retail sales should rise 4.1 per cent this holiday season, slower growth than in the past two years as mixed economic data and political uncertainty weigh on consumers, the world’s largest retail trade association said.
The forecast released on Tuesday by the National Retail Federation puts sales at $586.1-billion (U.S.) in November and December. The 4.1 per cent growth forecast trails the 5.6 per cent growth seen in 2011 and 5.5 per cent growth in 2010.
The NRF forecast is one of the closely watched benchmarks for expectations ahead of the holiday season, which can account for one-third of annual sales in many cases. With consumer spending making up about 70 per cent of the U.S. economy, the holiday season is an important gauge as to whether the slow-growing U.S. economy can shift into a higher gear.
The biggest things holding back consumers are uncertainty over whether lawmakers can come to an agreement to avoid the so-called “fiscal cliff” of across-the-board spending cuts set for Jan. 2 as well as tax increases for all income groups.
“It’s the uncertainty about where the economy is going, the uncertainty at the federal level about the fiscal cliff, the absence of a path forward from the president and the Congress,” NRF President Matthew Shay said in an interview.
Recent signs on the economy have been mixed. On Friday, the U.S. Department of Commerce said that personal income ticked up 0.1 per cent, but was down 0.3 per cent after accounting for inflation and taxes – the first decline in real disposable income since November.
Consumers have been hit by a rise in gasoline costs and unemployment that remains above 8 per cent.
But home values and the stock market have risen, helping consumer confidence touch a four-month high in September.
The NRF forecast is more optimistic than some others already released. Last month, research firm ShopperTrak forecast a 3.3 per cent rise in sales for the holiday season, while the International Council of Shopping Centers forecast a 2.5 per cent increase.
The NRF forecast includes most traditional retail categories including non-store, auto parts and accessories stores, discounters, department stores, grocery stores, and specialty stores, and exclude sales at automotive dealers, gas stations, and restaurants.
Separately, Shop.org, forecast a 12 per cent increase in online holiday sales to a range of $92-billion to $96-billion for the November-December period. The estimate is the NRF’s digital division’s first forecast of online sales.