General retail-industry sales will increase 3.4%, according to the National Retail Federation’s recently released 2013 economic forecast. The projection follows the recent 3% growth seen in holiday sales, as well as the NRF’s preliminary projection of 4.2% growth seen in 2012.
Online sales are expected to grow between 9% and 12%—possibly just above the 11.1% growth seen in online sales this past November and December—according to Shop.org, NRF’s digital division.
“What we witnessed during the holiday season is an indication of what we are likely to see in 2013," says NRF president and CEO Matthew Shay. "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. Retailers will compensate for the drag on household spending this year by managing inventories and focusing on providing value for their shoppers through unique promotions in stores and online and exclusive product lines.”
The key factors that contributed to the NRF’s 2013 economic forecast are:
- Employment: The labor market continues its modest recovery, but 2013 is not expected to result in meaningful acceleration in growth. As of December 2012, the unemployment rate has held steady for the last two months at 7.9%. Retailers on average employed 150,000 more workers in 2012, and the industry remains one of the biggest employers in the world.
- Income growth: Consumers are constrained by modest growth in income, and recent legislation passed in January increased payroll taxes for millions of workers, further limiting Americans’ spending decisions.
- Housing: NRF expects the housing sector to continue to improve and the fundamentals for growth to see continued gains in 2013.
- Inflation: Price pressures continue to be contained. NRF expects the Consumer Price Index to increase 1.9% in 2013, below the 2.1% increase in 2012.
- Consumer confidence: Current consumer attitudes are likely weighed down because of the handling of the fiscal cliff and the increase in payroll taxes. NRF analysts expect confidence to improve as the pace of the recovery accelerates in the second half of 2013.
“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,” states NRF chief economist Jack Kleinhenz. “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.”
[Image courtesy of thinkstock.com/Photodisc]