Here’s one more organization that believes the headlines which came out of Washington during the fiscal cliff struggle caused consumers to lose enthusiasm and keep their wallets in their pockets. The National Retail Federation thinks Washington will be using the same recipe throughout 2013 with similar results.
NRF says that preliminary stats show a gain in retail spending in 2012 of 4.2%, excluding automobiles, gas stations and restaurants. It’s only projecting a 3.4% increase during 2013.
“What we witnessed during the holiday season is an indication of what we are likely to see in 2013. Consumers read troubling economic headlines every day and look at their bottom lines at the end of the month, and they don’t like what they see,” NRF President and CEO Matthew Shay said. “Pushing fiscal policy decisions down the road will lead to even greater uncertainty, and will continue to impact consumers’ desire and ability to spend on discretionary items. The administration and congress need to pursue and enact policies that lead to growth and economic expansion, or it could be another challenging year for retailers and consumers alike. Retailers will compensate for the drag on household spending this year by managing inventories and focusing on providing value for their shoppers through unique promotions in stores and online and exclusive product lines.”
NRF sees the following factors playing into 2013:
* continued slow growth in employment levels
* continued slow growth in consumer income, exacerbated by higher Social Security payroll deductions
* housing will be a plus, with pricing continuing to gain strength
* no real concerns about inflation
* the current consumer confidence blahs will improve as time goes on
“While it’s too early to know the full effect of higher payroll taxes, there’s no question that many consumers will feel some kind of impact from the change in their paychecks,” said NRF Chief Economist Jack Kleinhenz. “That said, consumers have in the past shown a resiliency in the face of uncertainty, and we expect those impacted to adjust to smaller budgets by trading down or simply cutting back on certain items. Overall we foresee some improvements in the second half of the year should the outlook for job creation and income growth improve.”