NRF forecasts holiday retail sales increase of 2.8%

Casual Living Staff -- Casual Living, 10/11/2011 5:27:28 PM

The National Retail Federation expects holiday retail sales to increase 2.8% to $465.6 billion this year, lower than the 5.2% increase retailers experienced last year and slightly higher than the ten-year average of 2.6%.

"Retailers are optimistic that a combination of strong promotions and lean inventory levels will help them address consumer caution this holiday season," said NRF President and CEO Matthew Shay. "While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009."

Though several economic indicators paint a solid picture for the holiday season - including 14 consecutive months of retail sales growth and a substantial reduction in household debt - continued consumer uncertainty over the stock market, higher gas and food prices, fiscal policy and sputtering job growth will impact spending this holiday season. Additionally, the substantial year-over-year gains for the 2010 holiday season will create more difficult comparisons for retailers to achieve this year.

"Just when you think the U.S. economy is turning around, another factor comes into play that changes the game," said NRF Chief Economist Jack Kleinhenz, Ph.D. "Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season. How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel."

NRF's holiday sales forecast is developed based on an economic model using several indicators including consumer confidence, consumer credit, disposable personal income and previous monthly retail sales releases. The organization defines holiday sales as retail industry sales in the months of November and December. Retail industry sales exclude sales at automotive dealers, gas stations, and restaurants.