Holiday spending still a guessing game

2013-10-12T20:30:00Z 2013-10-14T13:35:04Z Holiday spending still a guessing gameAndrea Holecek Times Correspondent nwitimes.com
October 12, 2013 8:30 pm  • 

Dawn Johnson is optimistic about her store’s 2013 holiday sales, but she’s also concerned an ongoing government shutdown could squeeze shopper spending.

Johnson, owner of Mary and Martha Home Accents in Highland that specializes in unique home decor, said her sales have increased annually for the almost 15 years she’s been in business except in 2008, when the economy went into recession.

“Maybe people won’t be able to spend money on big purchases, but everyone looks for little thing that make people feel better,” Johnson said. “The special decoration for the table or picture for the wall.”

The holiday period, which extends from mid-November to Christmas, is critical to retailers because it can hold the key to their annual profitability.

Retail experts’ holiday forecasts currently differ with some optimistic and others pessimistic. All projections are based on a stable economy, the end of the Congressional stalemate on the nation’s budget and no default on government’s debt.

The industry normally sees about 20 percent of its annual retail sales and earns about 35 percent of its profit during the holiday period, according to Richard Feinberg, a Purdue University professor of consumer sciences and retailing.

Feinberg has a negative outlook on holiday sale, which he projects will range from flat to 5 percent lower than last year based on the Social Security tax reduction and lingering high rates of unemployment and underemployment.

He calls any suggestion of an increase over last year "overly optimistic." Yet the National Retail Federation contends holiday sales will jump 3.9 percent to $602.1 billion. During the 2012 holiday retail season, consumers spent $590 billion.

“Our forecast is a realistic look at where we are right now in this economy – balancing continued uncertainty in Washington and an economy that has been teetering on incremental growth for years,” said NRF President and CEO Matthew Shay.

“Overall, retailers are optimistic for the 2013 holiday season, hoping political debates over government spending and the debt ceiling do not erase any economic progress we’ve already made,” Shay stated in the federation’s recently released forecast.

And Feinberg also stated there must be caution used when making on holiday sales projections.

“Any number of external events can significantly affect holiday retail sales,” he said in a press release. “Consumer spending is sensitive to poor weather, government inaction leading to shutdowns, gasoline prices and geopolitical situations at home and abroad."

Locally, Johnson said she’s concerned about the state of the nation’s economy and what’s happening in Congress.

“I think it will affect people’s decisions,” she said. “They may have to cut back, but if they’re going to give a gift it will have to be special.”

 

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