National Retail Federation predicts lower-than-average rise in sales during holiday season

A checkout line at a Tennessee Best Buy in November 2011. The National Retail Federation expects holiday sales this year to increase at a slower 4.1 percent.
A checkout line at a Tennessee Best Buy in November 2011. The National Retail Federation expects holiday sales this year to increase at a slower 4.1 percent. (MARK HUMPHREY / AP, File)
By Anne D'Innocenzio, Associated Press
Posted: October 04, 2012

NEW YORK - Americans are expected to spend more during what's traditionally the busiest shopping season of the year, but they're not exactly ready to shop 'til they drop like they have been in the last two years.

The National Retail Federation, the nation's largest retail trade group, said Tuesday that it expects sales during the winter holiday shopping period in November and December to rise 4.1 percent this year. That's more than a percentage point lower than the growth in each of the last two years, and the smallest increase since 2009, when sales were up 0.3 percent.

The projections are an important indicator for retailers that depend on the last two months of the year for as much as 40 percent of their annual sales.

The holiday shopping season is one gauge of not only the shopping habits, but also the mindset of the average American during what has turned out to be a slow and uneven economic recovery.

"In all the years, this is the most challenging year doing a forecast," said Matthew Shay, president and CEO of the National Retail Federation, based in Washington. "There are so many uncertainties."

No one is feeling those uncertainties more than U.S. shoppers. Darlene Johnson of Silver Spring, Md., says her outlook has improved in the last few months. The value of her 401(k) retirement plan has risen. Home sales where she lives are up again, and her neighbors are getting higher prices for their houses.

Still, Johnson, who has been grappling with higher food and gas prices, says the economy is still not stable enough for her to splurge during the last quarter. And she's worried about how a U.S. debt crisis could affect her.

Johnson says that last year, she overindulged and spent about $5,000. It took until this past May to pay down her credit card debt. As a result, this year, she plans to cut her holiday spending to $1,500.

It is Americans' worries about the economic uncertainty that led the National Retail Federation to predict slower growth during the winter holiday shopping season than the increase of 5.6 percent and 5.5 percent in 2010 and 2011, respectively.

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