Washington — Annual retail sales are expected to grow 3.4 percent this year, according to an economic forecast from the National Retail Federation (NRF).
The increase is 19 percent below 2012, when retail sales rose an estimated 4.2 percent, the trade association said.
In contrast, online sales are projected to increase between 9 percent and 12 percent this year.
The NRF attributed its tempered New Year outlook to fiscal concerns and economic uncertainty.
“What we witnessed during the holiday season is an indication of what we are likely to see in 2013,” said NRF president/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 said retailers will compensate for the drag on household spending by managing inventories, developing exclusive product lines, and providing value for shoppers through unique promotions in stores and online.
Factors contributing to NRF’s 2013 economic forecast include modest income growth, higher payroll taxes and slow employment gains, which will limit Americans’ spending decisions.
“While it’s too early to know the full effect of higher payroll taxes, there’s no question that many consumers will feel some kind of impact from the change in their paychecks,” said NRF chief economist Jack Kleinhenz. “We expect those impacted to adjust to smaller budgets by trading down or simply cutting back on certain items.”
Positive trends factored into the forecast include a decline in the Consumer Price Index, improved housing sector strength, and growing consumer confidence by the back half of the year.
“Overall we foresee some improvements in the second half of the year should the outlook for job creation and income growth improve,” Kleinhenz said.