There has been a fair amount of media coverage of the forecast for holiday sales released by the International Council of Shipping Centers. The numbers are worse than they seem at first. The forecast means that weakness in some parts of the industry will be so bad that some retailers may not make it to 2012. Others will be badly crippled. Both serious problems mean that holiday hiring could be close to zero.
The association expects U.S. holiday sales to rise 3% this year. That is down from 4.1% in 2010, but much better than the drops of 1.3% in 2009 and 6.1% in 2008.
What is concerning is that 3% growth does not get the industry anywhere close to the growth rates in the first half of the decade, when year-over-year improvements were often 5% or better.
Retail sales are still one of the most vicious cycles in the economy. Poor consumer spending pressures retail profits. That in turn triggers lay-offs. People laid off are not likely to visit malls and stores. The cycle has been in place for almost all of the holiday shopping months over the past four years.
Many economist expect GDP growth in the fourth quarter to be as low as 1%. That is probably not enough to support the International Council of Shipping Centers forecast of 3% retail growth in the final two months of the year. If 2008 and 2009 are any indications, thousands of stores will close in January of 2012, and that will cost the economy tens of thousand of jobs.
Douglas A. McIntyre
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