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Will the Government Shutdown Cast a Shadow on Holiday Sales?

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With less than a month before the holiday shopping period starts, the National Retail Federation has forecasted a slight growth in sales, though the stalemate in Washington poses a threat to consumer confidence.

Sales in 2012 grew 3.5% from the previous year, and NRF’s 2013 projection is 3.9% growth from 2012. During the past decade, holiday sales have grown an average of 3.3%.

NRF bases its estimate on an economic model incorporating consumer confidence, consumer credit, disposable personal income and previous monthly retail sales reports. In a news release about the forecast, NRF said positive growth in U.S. housing and consumer spending on higher-priced items gives retailers reason to be optimistic. At the same time, the organization noted the potential negative impact of the ongoing government shutdown, the approaching debt-ceiling deadline and debate over foreign affairs.

A 3.9% increase would equal $602.1 billion in holiday sales, and a chunk of that is expected to come from ecommerce. Shop.org released its sales forecast for holiday cyber-shopping in the next two months, saying it anticipates sales to grow 13% to 15% from last year, to be as much as $82 billion. Last year, online sales increased 15.5% in the final quarter of 2012.

NRF defines holiday sales as November and December purchases from retail outlets including auto parts and accessories stores, discounters, department stores, grocery stores, specialty stores and non-stores (kiosks and electronic sales). Purchases at restaurants, car dealers and gas stations are not included.

Smart Shopping

Before you go out and do your part for the economy, take a look at your finances. Holiday sales growth can be great for consumers, but not if it means debt in the new year.

The holidays may seem far away, but shopping season isn’t, so don’t put off setting that budget any longer. Just like any good purchase, consumers need to do a little research, not only about the quality of the products but also for deals, considering how often people miss out on discounts.

And there’s more to holiday spending than wish lists and gift wrap, so don’t forget to factor travel and social spending into that budget.

This isn’t an attempt to spoil seasonal cheer. Getting carried away with spending in the next few months could leave you with credit card debt, which is not a great gift to yourself or your credit score. High credit card debt could hurt your credit utilization ratio and lower your credit score as a result. Monitoring your credit score can help you hold yourself accountable for your credit habits. There are free credit score tools on the market that let you monitor your scores regularly, and Credit.com offers one, too. If you do go overboard with your credit expenditures, you’ll see how it affects your credit so you’re less tempted to go down that road the next time.

So in advance of adding to that 3.9% bump in holiday sales, decide what you can afford, and treat yourself to a debt-free holiday.

Image: iStock

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  • drhoops

    What planet are you living on if you think holiday sales will be up this year? Not only does everyone know someone who is unemployed but 1 out of 4 people know someone who’s been unemployed for over a year.

    From the middle class on down, consumers didn’t spend money this summer and they sure as hell aren’t going to spend it this holiday season. Most of the people I know tried to do most of their holiday shopping at the end of the summer if possible.

    This will be one of the worst holiday sales seasons in almost 8 years. Consumers will shop early and cheap. After that initial rush, you won’t see them again until after the January 1st. The sad thing is, I would have written these same comments before the government shut down. Whoever thinks differently doesn’t have their pulse on the average American right now.

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