WASHINGTON — The National Retail Federation here projected that retail sales would grow about 3.4% in 2012, to $2.53 trillion (excluding autos, gas and restaurants).
That would represent a slowdown from the pace of growth in 2011, when sales grew an estimated 4.7%.
Although NRF said holiday spending at the end of 2011 was up 4.1% over 2010 levels, a pullback in consumer spending is expected. NRF made the projections at its Annual Convention & Expo this month in New York.
Several factors contribute to this forecast, the NRF said:
• Lower unemployment should boost income and spending, but income growth is still constrained.
• NRF expects home sales and construction will improve slightly in 2012, with low interest rates and affordability at an almost 30-year high.
• NRF expects inflation to slow down to near 2%, although rising gas prices could pressure spending.
• Expanding consumer credit indicates consumers have confidence to take on debt.
• Confidence continues to rebound, but remains fragile.
The association focused its sales forecast around the “Retail Means Jobs” theme.
“Over the last 18 months, retailers have been on the forefront of the economic recovery — creating jobs, encouraging consumer spending, and investing in America,” said Matthew Shay, NRF president and chief executive officer. “Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Retailers have played a key role in driving growth, but to continue this momentum we need Washington to act on proposals that will spur job creation and unleash the power of the private sector.”
The NRF said it also sent a letter to President Obama earlier this month asking him to call for action on several initiatives that would support retail when he delivered his State of the Union address last week. The letter, signed by Shay and Terry Lundgren the chairman, president and CEO of Macy’s and chairman of NRF, called for legislation to tax online retailers and brick-and-mortar retailers more equitably; corporate tax reform to eliminate certain deductions in exchange for a lower overall rate; and more open trade agreements to remove “outdated and protectionist tariffs” on consumer goods.
After the speech, the association said it welcomed Obama’s emphasis on job creation, but “expressed caution” about the president’s emphasis on growing the manufacturing sector. Obama outlined a plan to crack down on “unfair practices” in some overseas manufacturing hubs like China, where retailers source many of their goods, and called for the creation of incentives for vendors to bring manufacturing back to the U.S.
“We welcome the president’s commitment to create jobs in manufacturing, an industry that’s critical to a healthy supply chain,” Shay said. “But retail and other service industries support far more jobs than manufacturing, and we need economic policy that supports all industries and doesn’t favor one sector of the economy over another. We hope ‘Made in America’ isn’t code for protectionist trade policies that only drive up prices for American consumers while doing little to create U.S. jobs.”
