U.S. retail sales may increase 3.9% during the holiday season, as political and economic uncertainties damp consumer confidence, the National Retail Federation said.
Sales may rise to $602.1 billion in November and December, Washington-based NRF said today in a statement. The increase is slightly higher than last year’s 3.5% gain and the 10- year average of 3.3%, NRF said. Stores may hire 720,000 to 780,000 seasonal employees, compared with 720,500 last year, the group also said.
The first partial government shutdown in 17 years and the prospect of a lengthy budget fight could jeopardize the economic recovery and cool consumer sentiment, the auto market and sales of luxury goods. The economy has shown positive signs as unemployment dropped in August to its lowest level since December 2008, while sales of previously owned homes rose in August and housing prices gained 15% from a year earlier.
“We’re trying to balance looking at the whole year of relatively strong fundamentals underlying the economy against the uncertainty coming out of Washington and the significant unresolved issues that exist at a policy level,” NRF President Matthew Shay said in an interview. “We’re in for what could be a solid season, but we have to let the folks in Washington get out of their own way a little bit to let that happen.”
Online sales will rise as much as 15% to $82 billion in November and December, the NRF’s shop.org arm projected. That would compare with an increase of 15.5% in e-commerce sales in the fourth quarter of last year, the NRF said, citing Commerce Department data.
The Federal work stoppage may subtract as much as 1.4 percentage points from economic growth, depending on its length, according to Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC.
The partial shutdown entered its third day today after a meeting between President Barack Obama and congressional leaders yesterday failed to break the budget logjam that has led to the first shutdown since 1996.
The NRF would consider revising the sales estimate to take into account the impact of the shutdown if it persists, especially beyond a few weeks, Jack Kleinhenz, the group’s chief economist, said on a conference call today.