Retail sales will grow 3.4% in 2012, says NRF
Home Accents Today Staff -- Home Accents Today, 1/16/2012 4:30:53 PM
NEW YORK - The National Retail Federation forecasts retail industry sales will rise 3.4% to $2.53 trillion (excluding autos, gas and restaurants), slightly lower than 2011's 4.7% sales growth.
"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."
A number of factors contributed to NRF's 2012 economic forecast, including:
• 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: Increased 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 2% 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.
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