(By Balachander) The National Retail Federation (NRF) projects an increase of 3.4 percent in retail sales for 2013, with online sales expected to grow as much as 12 percent.
The world's largest retail trade association said the subdued forecast comes on the heels of a holiday season that went head-to-head with Washington's political wrangling over fiscal concerns, shifting consumers' spending plans downward.
NRF said retail sales expectations for 2013 were slightly less than the preliminary 4.2 percent growth seen in 2012.
Holiday retail sales rose 3.0 percent in 2012, yet came in below forecast as economic uncertainties had a visible impact on consumer spending, NRF had said earlier this month.
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Shop.org, NRF's digital division, expects online sales to increase between 9.0 percent and 12.0 percent this year. Online sales during the months of November and December in 2012 rose 11.1 percent.
"What we witnessed during the holiday season is an indication of what we are likely to see in 2013," NRF CEO Matthew Shay said. "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 pushing fiscal policy decisions down the road will lead to even greater uncertainty, and will continue to impact consumers' desire and ability to spend on discretionary items.
The administration and congress need to pursue and enact policies that lead to growth and economic expansion, or it could be another challenging year for retailers and consumers alike, Shay added.
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"Overall we foresee some improvements in the second half of the year should the outlook for job creation and income growth improve," said NRF Chief Economist Jack Kleinhenz.