More Confused Forecasts for Holiday Spending

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As research firms, retail associations and large retailers set expectations for the results of the holiday shopping season, those expectations rarely match one another. Perhaps wildly different views of fiscal cliff effects cause the wide spread among forecasts. Whatever the cause, some groups will be extremely disappointed.

The most closely followed forecast of holiday sales almost certainly is the one from the National Retail Federation. The association, which has 9,141 members, reported it expects holiday sales this year to “increase 4.1 percent to $586.1 billion.” In the world of economic forecasts, the NRF’s is old because it was made on October 2. More recently, the NRF released a statement that said, “According to a preliminary Black Friday shopping survey, up to 147 million people plan to shop Black Friday weekend (Friday, Saturday and Sunday), a slight decrease from the 152 million who planned to do so last year.” The two NRF predictions cover different periods, but the latter one is hardly encouraging.

One of the largest drivers of holiday sales is consumer electronics. Games, smartphones, GPS gadgets and cameras account for much of the consumer activity in November and December. The Consumer Electronics Association (CEA) sounded a sour note recently:

More than half (51 percent) of those surveyed said the risk of the fiscal cliff will negatively impact their overall spending this holiday season as well as the amount of money they spend on gifts. Eighteen percent of respondents said the fiscal cliff was going to have a large impact on their overall spending this holiday.

Although the NRF data covers a broader swath of retailers, the association may want to take note of the CEA data.

Gallup posts an annual forecast of holiday sales as well. Because of the firm’s reputation, the information is taken very seriously. Gallup just reported that “Christmas Spending,” its term for holiday activity, will be flat:

U.S. consumers predict their total 2012 Christmas spending to be $770, roughly matching the $764 they estimated in 2011. Gallup modeling suggests this estimate points to a good, though not great, season for retailers.

The Gallup data hardly forecasts a disaster, but it should be worrisome for retailers who expect a big success at the end of the year. And the number is well below the $866 figure in 2008 and $826 in 2007. No matter how bright the economic recovery may seem, it still has a long way to go before reaching prerecession levels, at least as measured against consumer holiday activity tracked by Gallup.

Some of the forecasts about the holiday season are very wrong. Most retailers need huge sales to post good annual numbers. Although forecasts do not match one another, most of the predictions are not good.

Douglas A. McIntyre

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