The National Retail Federation predicted that retail sales in 2013 would increase 3.4 percent, less than the 4.2 growth seen in 2012.
“What we witnessed during the holiday season is an indication of what we are likely to see in 2013,” said NRF president and CEO Matthew Shay in a statement. “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.”
Among the factors cited in the NRF’s forecast: a predicted lack of meaningful growth in the labor market; modest growth in consumer income; continued improvement in the housing sector; and a predicted drag on consumer confidence due to the wrangling over the “fiscal cliff” and the resulting increase in payroll taxes.
“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 in a statement “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.”
Shop.org, NRF’s digital division, expects online sales in 2013 to grow between 9 percent and 12 percent, roughly in line with last year’s 11 percent growth.