The National Retail Federation, whose reports on the U.S. economy are widely watched, is forecasting a 3.4-percent rise in retail sales this year – down from a preliminary forecast of 4.2 percent growth in 2013 made last year.
The NRF said in a statement that disappointing spending levels during the Christmas holiday season which were hit by political wrangling between President Obama and the Republican Party in Congress were likely to continue this year.
“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.
“Pushing fiscal policy decisions further down the road will lead to even greater uncertainty, and will continue to impact consumers’ desire and ability to spend on discretionary items. The [Obama] administration and Congress need to pursue and enact policies that lead to growth and economic expansion, or it could be another challenging year for retailers and consumers alike,” he adds.
Shay said retailers will compensate for lower sales by managing their inventories more efficiently, focusing on giving customers value, and using promotions in stores and online.
Meanwhile, the NRF said it expects inflation to be contained, with prices rising by 1.9 percent compared with 2.1 percent in 2012.
It also said that it expects consumer confidence to improve “as the pace of the recovery accelerates in the second half of 2013.”