Uncertainty to Slow Growth of Retail Sales in 2013

Retail sales this year are expected to grow at a slower pace than in 2012 as continued political wrangling in Washington and the sluggish global economy will likely inject further uncertainty into the market and force shoppers to play defense.

In 2013, sales are forecast to grow by 3.4% compared with the preliminary 4.2% growth seen in 2012, the National Retail Federation said on Monday.

The projection comes amid a weaker-than-expected holiday season, which went head-to-head with the fiscal cliff debate.

“What we witnessed during the holiday season is an indication of what we are likely to see in 2013,” said NRF 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.”

Shay points to a number of macroeconomic factors for the forecast, including the modestly recovering labor market and tepid income growth. He also notes that consumer confidence will likely be weighed down due to the handling of the fiscal cliff and increase in payroll taxes, though the NRF anticipates an acceleration in the pace of recovery in the second half of 2013.

“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,” said NRF Chief Economist Jack Kleinhenz.

One trend that will continue this year despite the lingering economic problems: the number of people shifting their shopping to the Internet.

Online sales are projected to rise between 9% and 12% this year, according to the NRF, which follows 11.1% growth during 2012’s November and December.