Retail
National Retail Federation Hunts Ghost Of American Shopper
Published:
Last Updated:
The National Retail Federation predicts that retail sales will rise 4% this year. The forecast does not include sales at gas stations, car dealers or restaurants. Stronger-than-expected retail figures late last year contributed to the fairly bullish assessment.
Recent data from the government have confirmed two trends. Factory activity is up. Any forward momentum of consumer activity as measured by the housing markets and most discretionary spending, however, remains fragile. The NRA is acutely aware that inflation could keep consumer spending low. It could also hurt retail margins, which are not a part of the analysis for 2011 sales.
The expected rise in retail industry activity was underscored by Home Depot’s (NYSE: HD) announcement that it would add 60,000 temporary workers for its busiest season–the spring. The leading home supply retailer must think that demand will offset both higher fuel prices and an ongoing drop in home sales. It is hard to find a positive trend among that data, but Home Depot knows better.
Many economists argue that retail sales are bound to improve. Consumers are tired of frugality whether they can afford to break with the habit or not. Consumers are less leveraged than they were two years ago, but may not be deleveraged enough yet in a world where wages adjusted for inflation have barely moved in 20 years. Consumer wallets are bulging with Bush-era tax credit dollars. But, there is data that people cannot use this money for much more than debt reduction and everyday expenses.
The NRA has decided to make a forecast based on a very few factors, which may not occur or remain positive. The most important among these is unemployment and underemployment which are not expected to improve much this year. But, that does not mean the new forecast will miss the mark.
Shoppers may march back into stores and malls. They may spend at levels not seen in three years. Retail sales could move even higher than 4%, but there is a risk just as there was in 2005 and 2006. Americans may once again begin to spend money that they do not have or money that should go to debt reduction. Retail spending will fall again late this year, if that is true.
Douglas A. McIntyre
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.