U.S. holiday shopping season proves disappointing

CBS News

WASHINGTON U.S. holiday retail sales this year were the weakest since 2008, when the nation was in a deep recession. In 2012, the shopping season was disrupted by bad weather and consumers' rising uncertainty about the economy.

A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmas increased 0.7 percent, compared with last year. Many analysts had expected holiday sales to grow 3 to 4 percent.

Shoppers were buffeted this year by a string of events that made them less likely to spend: Superstorm Sandy and other bad weather, the distraction of the presidential election and grief about the massacre of schoolchildren in Newtown, Conn. The numbers also show how Washington's current budget impasse is trickling down to Main Street and unsettling consumers. If Americans remain reluctant to spend, analysts say, economic growth could falter next year.

• Subdued mood on the last holiday shopping weekend
• Retailers are hoping for a "Super Saturday"

In the end, even steep last-minute discounts weren't enough to get people into stores, said Marshal Cohen, chief research analyst at the market research firm NPD Inc.

"A lot of the Christmas spirit was left behind way back in Black Friday weekend," Cohen said, referring to the traditional retail rush the day after Thanksgiving. "We had one reason after another for consumers to say, `I'm going to stick to my list and not go beyond it."'

Holiday sales are a crucial indicator of the economy's strength. November and December account for up to 40 percent of annual sales for many retailers. If those sales don't materialize, stores are forced to offer steeper discounts. That's a boon for shoppers, but it cuts into stores' profits.

Last-minute shoppers like Kris Betzold, of Carmel, Ind., embraced discounts that were available before Christmas.

"We went out yesterday, and I noticed that the sales were even better now than they were at Thanksgiving," said Betzold Monday while shopping at an upscale mall in Indianapolis. Betzold, who said the sluggish economy prompted her and her husband to be more frugal this year, noted that she saved about $25 on a Kindle Fire she found at Best Buy.

Spending by consumers accounts for 70 percent of overall economic activity, so the eight-week period encompassed by the SpendingPulse data is seen as a critical time not just for retailers but for manufacturers, wholesalers and companies at every other point along the supply chain.

The SpendingPulse data include sales by retailers in key holiday spending categories such as electronics, clothing, jewelry, luxury goods, furniture and other home goods between Oct. 28 and Dec. 24. They include sales across all payment methods, including cards, cash and checks.

It's the first major snapshot of retail sales during the holiday season through Christmas Eve. A clearer picture will emerge next week as retailers like Macy's and Target report revenue from stores open for at least a year. That sales measure is widely watched in the retail industry because it excludes revenue from stores that recently opened or closed, which can be volatile.

Despite the weak numbers out Tuesday, retailers still have some time to make up lost ground. The final week of December accounts for about 15 percent of the month's sales, said Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse. As stores offer steeper discounts to clear some of their unsold inventory, they may be able to soften some of the grim results reflected in Tuesday's data.

Still, this season's weak sales could have repercussions for 2013, he said. Retailers will make fewer orders to restock their shelves, and discounts will hurt their profitability. Wholesalers, in turn, will buy fewer goods, and orders to factories for consumer goods will likely drop in the coming months.

• no previous page
• next

1/2

[jurado]

" bad weather . . rising uncertainty about the economy . . . possible tax hikes . . spending cuts early next year . . massacre of schoolchildren in Newtown . . Superstorm Sandy . . "

Hey, you forgot to blame Bush.

Stop with the excuses. Wake up!! We're still in recession. 0bama is cooking the books on unemployment, massive defecit spending is propping up GDP, people are broke, housing is still bottoming out (except for Washington DC).

[antoniof123]

Well, thank you congress this is the most worthless congress in American history. Almost as low as a used car salesman I would say lower and the jerk running it what have they done.

NOTHING they have done less than the 1946 (I think it was this year) do nothing congress. Of course they will blame it on someone else but I don't think Americans are buying that snake oil anymore.

[Ulgnud]

Sure doesn't sound like a robust end to the recession to me. None of the excuses to cover the issue will hold water. Face facts. Prices are high, Lots of people still unemployed, still being gouged for energy, and we still have no idea what the liberals are going to get away with in our taxes. Yeah people are being cautious. They have to be.

[foo8259]

Might help if retailers didn't start Christmas ads so early. I for one, am glad it's finally over -- at least until July.

[Energizer2112]

Superstorm Sandy and the election didn't mean squat to shopping. How stupid.