From Cassidy Turley:
Heading into this year’s holiday shopping season analysts were exceedingly cautious. Last year most of us predicted sales growth in the 3.5% to 4.5% range. The average increase in retail sales over the holidays has averaged 3.2% over the past decade. Those numbers include a brutal 2008 when, at the front end of the recession, sales recorded a rare decline of -2.8%, and they fell by another 1.2% during the dismal 2009 shopping season. Since that time, they have consistently been posting increases of 3.0% or more.
2013 was supposed to be the breakout year. Having weathered the policy-induced distractions of the fiscal cliff, sequester and government shutdown, the economy appeared to be picking up. From January through August of last year, the U.S. averaged 197,000 new jobs per month. By September, the month when most analysts release their predictions, the unemployment rate had fallen to 7.2% (its lowest level since December 2008 when jobs were hemorrhaging at a pace of 700,000 per month). Meanwhile, the Conference Board’s Consumer Confidence Index hit 82 in August of last year. This was the highest reading for this metric since January 2008—a full nine months before the near financial collapse that set off the Great Recession.
And so analysts were optimistic last year. GDP was up. Job growth was at its highest levels in eight years. Home prices were rebounding solidly. Confidence and consumer spending were posting solid and consistent gains. So it only seemed natural that these positive indicators for the overall economy would translate into the strongest sales gains seen so far in the post-Recession era. But what happened? Sales growth for the 2013 holiday shopping season came in at a humdrum 3.3%. Better than the ten-year average of 3.2%, but disappointing for an industry that had expected something more. Ultimately a short shopping season (blame the calendar for that one), terrible weather in most of the country and a still-cash-strapped consumer were blamed.
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