Less Spending Predicted this Holiday Season

The NRF is Predicting Slower Spending this Holiday Shopping Season

The largest retail trade organization in the world, the National Retail Federation, announced on Tuesday that the economy will most likely see a rise in holiday sales this coming winter of only 4.1 percent, a number reflecting slower growth than what was seen in the past two years.

The prediction states that retail sales in November and December, normally the strongest months for retail shopping, will be approximately $586.1 billion, a rise of 4.1 percent over last year’s sales. Contrast this number with the 5.6 percent increase in sales in 2011, and 5.5 percent in 2010, and you can see why retailers are worried about the future.

To understand the importance of this number, which is one of the most-watched benchmarks for the health of the economy, just consider that holiday sales which take place almost exclusively in November and December make up as much as one-third of annual sales. Combine that with the fact that 70 percent of the US economy is made up of retail sales, and it is easy to see how the NRF forecast and inspire or frighten retailers, economists and investors.

What is holding back consumers this year is lack of confidence. Will legislators agree to turn away from the “fiscal cliff” of across-the-board spending cuts scheduled for January 2, 2013, not to mention tax hikes for everyone, or will the country head straight over the side?

“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 commented.

About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com