Retailers hopeful after poor Dec. sales, fiscal cliff uncertainty
By Jay Keller
Analysts believe the drop in consumer confidence, especially during the holiday season, is linked to the ongoing debate over the fiscal cliff.
Estimates and key indicators have predicted an overall decrease over the past week and a recent report by Retail Metrics didn’t offer much promise.
The report, which Retail Metrics says includes sales estimates for retail’s most important month of the year, includes about one-fifth of total annual sales.
“Consensus estimates for December, according to Retail Metrics data, fell another 0.2 of a percentage point on Monday for both same-store sales and same-store sales excluding drug stores–to increases of 1.9% and 3.7%, respectively,” reported MarketWatch.
A late-December report from MasterCard Advisors also predicted the weakest retail sales since 2008 and that predictions are not always accurate.
Sales increased a mere 0.7 percent over sales in 2011 during the two months before Christmas, MasterCard Advisors SpendingPulse reported and the Retail Metrics data shows an even greater decline.
Regardless of the estimates, the retail industry expects Thursday’s report will verify that spending habits during the holiday season never gained any momentum.
Additionally, many will likely continue to say that shoppers were affected by economic uncertainties brought on by the debate of fiscal cliff legislation.
Analysts are hopeful that the fiscal cliff bill will provide businesses with greater tax certainty in the short term and help alleviate the fears of many consumers.
Temporary tax provisions known as tax “extenders” will be maintained for a year under the new legislation.
Under the new legislation, retail stores will receive tax breaks for improvements, something likely to resonate positively for consumers and outlets. Additionally, other industries will benefit including restaurants, railroads, racetracks, entertainment production and rum production in U.S. territories.
“This agreement might not be seen as perfect by everyone, but it gives American consumers and businesses the certainty they need to put worries over this issue behind them,” said Matthew Shay, head of the National Retail Federation, in a Reuters interview.