NRF Forecasting Slower Growth for Holiday 2006

The National Retail Federation (NRF) is expecting total holiday retail sales to grow 5.0% this year over last year, to $457.4 billion. That’s less than last year’s 6.1% rise in year-over-year holiday sales but higher than the annual 4.6% average increase of the past 10 years.

“The first half of 2006 was so strong incredibly for retailers, but we think that will be subdued in the second half,” says NRF spokesperson Scott Krugman.

The NRF had predicted in January a 4.7% increase in retail sales for all of 2006. But rising fuel prices, the slowing housing marketing, and concerns about the job market did not depress consumer spending during the first half of the year as the NRF had anticipated. Retail sales for the first six months of the year were actually 6% higher than for the same period in 2005.

“There’s not one economic indicator that will make a dramatic impact on retail; you have to look at them all together,” Krugman says. “But interest rates have been going up and home values are down a little, so homeowners are going to need a new source of spending cash other than refinancing.”

The NRF reports that 19.9% of retail sales occur during the holiday season, making it the most important time period of the year for the industry.

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