NRF Foresees Challenging U.S. Holiday Season, 2.2% Sales Gains

The National Retail Federation said on Monday that financial pressures and a lack of confidence in the U.S. economy will result in a lower 2.2 percent increase in sales this holiday season. This is well below the 4.4 percent ten-year average.

The recent events on Wall Street, and its heavy media coverage, have formed a strong sense of destabilization among many consumers, despite a 3.3 percent growth in GDP in the second quarter. According to IDEX Online analyst Ken Gassman, contrary to that feeling, other economic indicators such as a low unemployment rate and rising prices of new homes, still point to a healthy economy. Consumers, therefore, should have a stable discretionary budget.

The NRF forecasts the November-December sales to total $470.4 billion. These sales include most traditional retail categories such as discounters, department stores, grocery stores and specialty stores, and exclude sales at automotive dealers, gas stations and restaurants.

“We expect consumers to be frugal this season and less willing to splurge on discretionary items,” said NRF Chief Economist Rosalind Wells.

The retail trade association said a struggling housing market and rising unemployment accompanied by meager income gains will continue to hamper the consumer throughout the season. The NRF does not foresee an economic turnaround until the second half of next year.