NRF: '12 Retail Sales Will Grow 3.4%

January 16, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on January 17, 2012

The National Retail Federation predicts 2012 retail sales will grow 3.4 percent to $2.53 trillion despite continued high unemployment and uncertain job growth.

That growth will lag behind retail's 2011 pace, when relevant sales rose 4.7 percent, but is ahead of many economists' estimates for real U.S. GDP growth this year, which predict a rise of 2.1 to 2.4 percent. NRF's sales figures do not include sales of autos, gas and restaurants.

"Over the last 18 months, retailers have been on the forefront of the economic recovery--creating jobs, encouraging consumer spending, and investing in America," said NRF President and CEO Matthew Shay. "Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Retailers have played a key role in driving growth, but to continue this momentum we need Washington to act on proposals that will spur job creation and unleash the power of the private sector."

Shay announced NRF's forecast on Tuesday to 24,000 retailers and their partners at NRF€™s 101st Annual Convention and Expo today in New York.

Though retailers ended last year on a strong note with holiday sales rising 4.1 percent over 2010, many factors will continue to influence the expected slowdown in consumer spending, but none remain more cumbersome than the stalled unemployment rate and lack of newly-created jobs.

Factors contributing to NRF's 2012 economic forecast include:
* Employment: The number of Americans out of work is at its lowest level in nearly three years, and the rise in employment and hours worked should bolster income and spending.
* Income growth: Consumers are constrained by modest growth in income. Congress extended the cuts in payroll taxes and unemployment benefits for only two months. While these provide a lift, and are likely, consumers may act cautiously until both are approved. Income is predicted to lag consumption on a year-over-year basis.
* Housing: While most of the economic reports dealing with housing have shown a little more strength, these reports should be treated with caution, as some of the improvement is due in part to unseasonably mild weather. NRF expects home sales and construction will improve slightly in 2012 with low interest rates and affordability at an almost 30 year high.
* Inflation: Increase costs have been a drain on consumer purchasing power due to extraordinary agricultural commodity price inflation as well as high oil prices due to global geopolitical tensions. NRF expects inflation to slow down near a two percent range. Rising gas prices may also put pressure on spending.
* Consumer Credit: Easier lending standards are expanding consumer credit. Revolving credit appeared to break out from its holding pattern, showing a big surge in November, which indicates consumers have confidence to take on debt.
* Consumer confidence: Confidence continues to rebound from August lows but remains fragile given volatile financial market conditions and anemic housing markets.