Retailers don’t have much to cheer about this seasonMonday, December 31st, 2012
Retailers don’t have much to cheer about this season. According to several early surveys, consumer spending leading up to Christmas Day was weaker than anticipated, with growth slowing to levels not seen since the 2008 recession. Data from MasterCard Spendingpulse, which is based on credit card activity in the MasterCard payments network plus estimates for other payment types like cash, show that retail sales during the holiday season grew just 0.7%. Online sales increased 8.4%, but that’s down from the double-digit growth rates witnessed in recent years, according to Spendingpulse. The report, which excludes food, fuel, and auto sales, tracked activity from October 28th through Christmas Eve, so Hurricane Sandy clearly had some negative impact in November. Nonetheless, a separate report from ShopperTrak, the world’s largest counter of retail foot traffic, observed that sales recovered from their November lows and gained momentum as the holiday drew closer, but still fell below levels a year ago. ShopperTrak said retail sales during the week ending December 22nd declined 2.5% and foot traffic fell 3.3%. Consumer expectations also dropped sharply in the 30-day period ending December 13th, according to the Conference Board’s Consumer Confidence Index. The Index plummeted to 66.5, down from 80.9 in November. The Conference Board attributed the decline to uncertainty surrounding the so-called “fiscal cliff” of automatic tax increases and spending cuts. A similar decline was observed in August 2011 during the debt ceiling discussions, but within two months the Index snapped back. That gives us hope that a rebound in consumer confidence may be in store if Washington can avert the fiscal cliff.
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