After experiencing the smallest year-on-year increase in Christmas season sales since 2008, retailers need a boost this week in post-holiday shopping to redeem their bottom lines. Spending increased over 2011 holiday sales, according to SpendingPulse, but only by an anemic 0.7% (via Jeff Dunetz):
U.S. holiday retail sales this year were the weakest since 2008, when the nation was in a deep recession. In 2012, the shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy.
A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmasincreased 0.7 percent, compared with last year. Many analysts had expected holiday sales to grow 3 to 4 percent.
In 2008, sales declined by between 2 percent and 4 percent as the financial crisis that crested that fall dragged the economy into recession. Last year, by contrast, retail sales in November and December rose between 4 percent and 5 percent, according to ShopperTrak, a separate market research firm. A 4 percent increase is considered a healthy season.
The Associated Press offers a number of possible reasons for the poor performance, some plausible (Hurricane Sandy) and some less so (national grief over Newtown shooting), but this gets closest to the mark:
The numbers also show how Washington’s current budget impasse is trickling down to Main Street and unsettling consumers. If Americans remain reluctant to spend, analysts say, economic growth could falter next year.
In the end, even steep last-minute discounts weren’t enough to get people into stores, said Marshal Cohen, chief research analyst at the market research firm NPD Inc.
“A lot of the Christmas spirit was left behind way back in Black Friday weekend,” Cohen said, referring to the traditional retail rush the day after the Thanksgiving holiday in late November. “We had one reason after another for consumers to say, `I’m going to stick to my list and not go beyond it.”‘
Let’s just say that consumers seem more responsible than the federal government in planning their spending around contingencies for 2013. The economy seems almost certain to head back into recession, and taxes will likely go up on all Americans with Washington tied up in knots over fiscal-cliff policies. Small wonder that people sheltered cash this year rather than splurge.
NBC’s Today reported this morning that retailers hope that the “second season” will make up some of the lost ground, but that seems unlikely as long as the same conditions exist.