The head of the National Retail Federation is petitioning Congress for tax relief for consumers in the wake of sluggish September retail sales.
Retail industry sales for September (which exclude automobiles, gas stations, and restaurants) decreased 0.7 percent seasonally adjusted from last month, while increasing 1.4 percent unadjusted year-over-year, according to NRF.
In addition, September retail sales figures released by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) were flat (0%) unadjusted over last year and down 1.2 percent seasonally adjusted from August.
NRF is so concerned about the lack of consumer spending, it is petitioning Congress to hold a lame duck session to address the nation’s economy as soon as possible after the November elections, and to include tax relief for consumers in any economic stimulus package that is adopted.
“The United States is in the midst of a national crisis. Extraordinary measures are needed to address this profound economic emergency that has affected every American,” Tracy Mullin, NRF president and chief executive officer (pictured above), said in a letter to Congressional leaders.
“With economic concerns weighing down consumers, retailers are facing incredible challenges heading into the fourth quarter,” added NRF chief economist Rosalind Wells. “Retailers are cutting operating costs by whittling back inventory levels and trimming labor costs, but it is nearly impossible for companies to fully counteract a complete pullback in consumer spending.”
Sales at furniture and home furnishing stores decreased 2.3 percent seasonally adjusted from the previous month and dropped 9.2 percent year-over-year unadjusted, NRF said. Electronics and appliance stores declined 1.5 percent month-to-month seasonally adjusted while decreasing 2.1 percent unadjusted from September 2007. Apparel retailers also saw declines of 2.3 percent seasonally adjusted from August and dipped 2.0 percent unadjusted year-over-year.
Health and personal care stores’ sales remained solid, NRF said, increasing 0.4 percent seasonally adjusted from last month and 6.3 percent unadjusted year-over-year, NRF said. Grocery stores also posted strong gains, increasing 3.8 percent unadjusted from September 2007, while decreasing 0.4 percent from August.
“Consumer confidence has been badly eroded by the foundering economy and instability of the financial markets,” Mullin said. “Because consumer spending represents two-thirds of GDP and supports tens of millions of jobs, it is difficult if not impossible to foresee an improvement in overall economic growth until consumer confidence and spending improve.”
She continued, “There is hard evidence that the first round of economic stimulus checks were used for good purposes: to pay down debt, to help fund ordinary household expenses, and to purchase necessities. But we believe a second round of economic stimulus is needed and must include relief for the consumer. Increased consumer spending would create demand throughout all sectors of the nation’s economy, from manufacturing to transportation to construction.”
Mullin’s comments came in a letter sent Wednesday to House Speaker Nancy Pelosi, D-Calif.; House Minority Leader John Boehner, R-Ohio, Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky.
Pelosi said this week that the House is considering a lame duck session after the November 4 elections to consider economic stimulus legislation. The Senate is already scheduled to return November 17, although the agenda for the Senate session has not been determined.
Talk of a lame duck session and economic stimulus legislation comes as retailers are facing the slowest holiday growth in six years. NRF’s annual forecast predicts sales will rise 2.2 percent to $470.4 billion, which would be the slowest growth since 2002, when holiday sales rose 1.3 percent, and half the 10-year average of 4.4 percent.
Commenting on the commerce department figures, Brian Bethune, Global Insight chief U.S. Financial Economist, said he estimates that real consumption spending will fall by 3.5 percent in the third quarter—the largest decline since the second quarter of 1980.
He added that real growth is expected to be slightly negative in the third quarter, followed by a large negative in the fourth quarter.
“We now estimate that real consumer spending will decline by about 3.5 percent in the third quarter, the worst performance since the second quarter of 1980,” Bethune said. “Consumers are hunkering down big time, as employment is shrinking, hours worked are being slashed, and household net worth is taking huge negative hits from sharp declines in home and equity stock prices.”