The National Retail Federation is predicting an increase of 3.4 percent in U.S. retail industry sales this year, slightly less than the 4.2 percent growth seen in 2012.
The slightly subdued forecast comes on the heels of a holiday season that was hampered by fiscal concerns.
“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,” says Matthew Shay, president and chief executive officer, NRF. “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. 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’s digital division, Shop.org, expects online sales in 2013 to grow between 9 and 12 percent.
A number of factors contributed to NRF’s 2013 economic forecast, including slow, but modest recovery in the labor market, modest growth in income, the payroll tax increase passed earlier this month, continued improvement in the housing sector, the continued containment of price pressures with the Consumer Price Index expected to increase 1.9 percent this year and consumer confidence that is weighed down by fiscal uncertainty in Washington and increased payroll taxes, yet buoyed by the slow, but steady recovery.
“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,” says Jack Kleinhenz, chief economist, NRF. “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.”