Retail Sales in 2012 Forecast to Grow 3.4 Percent

The National Retail Federation (NRF) estimates the retail industry sales will rise 3.4 percent to $2.53 trillion this year, slightly lower than the pace in 2011 in which sales grew 4.7 percent, according to a report released on Jan. 16, 2012.

Though retailers ended last year on a strong note with holiday sales rising 4.1 percent compared to 2010, NRF stated many factors 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. 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 increase income and spending.
• Income growth: Consumers are constrained by modest growth in income. Income is predicted to lag consumption on a year-over-year basis.
• Housing: 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 due to extraordinary agricultural commodity price inflation as well as high oil prices due to global geopolitical tensions.
• 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 with volatile financial market conditions and anemic housing markets.

Source: ACA International