Although the high unemployment rate is believed to impact the outlook for industry retail sales growth in 2012, the retail industry is expected to grow at a rate faster than many other industries as sales rise 3.4 percent to $2.53 trillion, according to the National Retail Federation.
The figure is slightly lower than that of 2011 when sales grew 4.7 percent.
"Over the last 18 months, retailers have been on the forefront of the economic recovery – creating jobs, encouraging consumer spending and investing in America," says NRF President and CEO Matthew Shay. "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."
While retailers wrapped up 2011 with holiday sales rising 4.1 percent over 2010, many factors are expected to influence a possible slowdown in consumer spending, but the high unemployment rate and lack of newly created jobs are likely to be the main contributors, NRF maintains.
Income growth is also believed to be a factor. Although Congress extended the cuts in payroll taxes and unemployment benefits, those are only in effect for two months, NRF reports, and consumers may act cautiously until both are approved. Housing could be a factor, as well. According to NRF, most housing economic reports have shown some improvements, but this is partly because of unseasonably mild weather. Still, NRF expects home sales and construction to slightly improve in 2012 with low interest rates and affordability at a nearly 30-year high.
Another factor in play is inflation, NRF reports. The higher costs have been hurting consumer purchasing power due to extraordinary agricultural commodity price inflation as well as high oil prices due to global geopolitical tensions. NRF believes inflation will near a 2 percent range. Consumer credit and confidence are also at play. While confidence is rebounding from August, it remains fragile, and easier lending standards are expanding consumer credit.
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