U.S. holiday sales are down this year, with experts saying that it's due to consumers worried about the pending fiscal cliff. (Photo : Wikimedia Commons)
Holiday retail sales are the lowest they've been in four years, and retailers say that the tenuous standing of the economy.
A report from the MasterCard Advisors SpendingPulse said Tuesday that sales in the two months prior to Christmas increased only 0.7 percent compared with last year, which is far below the three-to-four percent growth that analysts had predicted this holiday season.
The sales last year during the holidays increased by two percent.
However, Mastercard claims that it represents only 30 to 35 percent of the retail sales in the U.S. with the exception of cars, groceries and restaurants. In addition, the company indicated that they expect sales to pick up during post-holiday shopping in the week after Christmas, which account for roughly 15 percent of holiday sales.
According to some experts, the low growth in holiday sales revenue may have been triggered by several unusual conditions this season, including the damage left by Superstorm Sandy to the East Coast in October and a warmer winter stalling winter clothes sales.
However, perhaps most impacting were concerns from consumers over the potential financial implications that the looming "fiscal cliff" could have on the economy.
The cliff, which would raise taxes for many Americans after the Bush-era tax cuts expire on Jan. 1, could be resolved by Washington, except President Obama and Republicans disagree regarding how to solve the problem. Democrats want to raise taxes on the wealthiest Americans while Republicans want more spending cuts on certain federal programs.
"The broad brush was Christmas wasn't all that merry for retailers, and you have to ask what those margins look like if the top line didn't meet their expectations," Kim Forrest, senior equity research analyst at Fort Pitt Capital Group, told Reuters.
Retailers such as Macy's and Target posted same-store sales in November that were behind what analysts predicted they would be raking in.
"You are looking at modest to marginal growth from a year ago," Michael McNamara, a SpendingPulse vice president, told Bloomberg News 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."