Right now, confidence is at a seven-month high as people are feeling better about rising home prices and a rebounding stock market. Still job growth remains weak and prices for everything from food to gas are higher. On top of that, there’s a worry that the U.S. economy will fall into another recession next year. That’s when tax increases and deep government spending cuts will take effect unless Congress reaches a budget deal.
“If (Congress) can get their act together, it will be good for the consumer’s psyche,” said Michael P. Niemira, chief economist at International Council of Shopping Centers, an industry trade group. “If they don’t, I think you could see problems. It could affect high-end spenders and the general confidence on the economy.”
Mary Mastenbrook, a 58-year-old who lives in Schaumberg, Ill., says she will be closely watching how the budget battle plays out. She bought a flat-screen TV last month at Abt Electronics, but she’s not sure how much she will be spending for the winter holidays.
“If things are not clear, we are going to temper what we’re going to spend,” a homemaker whose husband is a defense contractor. “You can’t spend a lot if you don’t know whether your job is secure.”
Because of economic and political uncertainty, The National Retail Federation, the nation’s largest retail trade group, has tempered its expectations for the winter holidays. The group said this week that it expects sales for the November and December period to rise 4.1 percent.
That’s more than a percentage point lower than the growth in each of the past years and the smallest increase since 2009 when sales were up just 0.3 percent. But the forecast still is higher than the 3.5 percent average over the past 10 years.