NEW YORK: US holiday sales growth slowed by more than half this year after gridlock in Washington soured consumers' moods and Hurricane Sandy disrupted shopping, MasterCard Advisors SpendingPulse said, Bloomberg reported on Wednesday.
Retail sales grew by 0.7 per cent from Oct. 28 through December 24, the Purchase, New York, research firm said yesterday, without providing a dollar figure in the billions. Sales grew at a two per cent pace in the same period a year ago. SpendingPulse tracks total US sales at stores and online via all payment forms.
Americans became skittish as Washington approached the end of the year without an agreement to forestall higher taxes and automatic spending cuts — the so-called fiscal cliff. Hurricane Sandy interrupted shopping in stores and online after it slammed into the East Coast in late October.
Last month, retailers from Macy's Inc to Target Corp posted same-store sales that trailed analysts' estimates.
"You are looking at modest to marginal growth from a year ago," Michael McNamara, a SpendingPulse vice president, said in a telephone interview yesterday. "Weather events and the fiscal debate both anchored the season in terms of growth.
"The media coverage, which did a good job of explaining the negative consequences of the fiscal cliff, created this negative trend in consumer confidence and spending."
The Standard & Poor's 500 Retailing Index dropped 0.3 per cent to 652.26 at 9:42am in New York, compared with a 0.1 percent gain for the broader S&P 500. The 33-company retail index had jumped 25 per cent this year through December 24.
The International Council of Shopping Centers reiterated today that it expects sales at retailers' stores open at least a year to climb 3 percent in November and December, slower than the 3.3 per cent gain last year.
Sales increased 0.7 per cent in the week ending Dec. 22 from a week earlier, ICSC said in a statement. It predicted stronger sales this week, benefiting from purchases in the two days before Christmas. Clearance sales and gift card redemption will spur sales, said Michael Niemira, ICSC vice president and chief economist.
Niemera said he doesn't expect retailers to resort to "huge across-the-board type of reductions" in after-Christmas sales.
The New York-based trade group maintained its projection that retailers will report comparable sales increases of four per cent to 4.5 per cent for December when they issue their latest monthly reports January 3. ICSC tracks more than 25 chains.
Consumer confidence fell in December to a five-month low, according to a December 21 report. The Thomson Reuters/University of Michigan consumer sentiment index slid to 72.9, the weakest since July, from 82.7 in November.
Sales in the Mid-Atlantic and Northeast regions, which account for 24 per cent of national consumer spending, contracted 3.9 per cent and 1.4 per cent, respectively, McNamara said. Upper Midwest spending also was hampered by disruptive weather, he said. By contrast, sales in the South and West ranged from about 2 per cent to about 4 per cent, he said.
Luxury sales "struggled," pulled down by the New York region, which generates 20 percent of that category's US sales and was hit hard by the hurricane, McNamara said.
Apparel and consumer electronics sales performed in line with the national average, he said.
The only bright spot was home-related merchandise, which benefited from the housing rebound, he said.
The hurricane also spurred that category, Robin Lewis, a New York-based retail consultant, said in a telephone interview yesterday.
"Sandy reached into people's holiday pocketbooks to pull money out that we spend on gifts to spend on ruined appliances, household repairs," Lewis said.
Another restraining factor, the December 14 shooting of 20 children at a Connecticut school, he said.
"The Newtown massacre, psychologically I think, spread through the country," Lewis said. "This event was not isolated in the Northeast. It slammed the consumer with a lot of sobriety and made us think about what is happening in this world we live in, particularly around the holidays, when things are supposed to be wonderful and peaceful."