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Government Shutdown Could Derail Holiday Retail Sales

NEW YORK ( TheStreet) -- Retailers are "cautiously optimistic" about "solid" holiday sales this year, an industry trade group said Thursday, but ongoing fiscal concerns and the U.S. government shutdown could derail expectations.

Holiday retail sales this year are expected to rise marginally over 2012. According to the National Retail Federation, sales in the months of November and December will rise 3.9% to $602.1 billion, slightly ahead of 2012's actual holiday season sales growth of 3.5%. The forecast is higher than the 10-year average holiday sales growth of 3.3%, NRF said in a release Thursday.

"Our forecast is a realistic look at where we are right now in this economy -- balancing continued uncertainty in Washington and an economy that has been teetering on incremental growth for years," NRF President and CEO Matthew Shay said in a press release. "Overall, retailers are optimistic for the 2013 holiday season, hoping political debates over government spending and the debt ceiling do not erase any economic progress we've already made."

On the one hand, positive growth from the U.S. housing market as well as consumers' appetite to buy larger-ticket items gives "retailers reason to be cautiously optimistic for solid holiday season gains," the release said.

Another bright spot in the holiday sales forecast -- online sales continue to surpass expectations. Shop.org, the NRF's digital retail division, predicts online sales this season to rise to $82 billion, which is between 13% and 15% higher than 2012.

But if the back-to-school season is any measurement, retailers could be disappointed. Companies from Wal-Mart (WMT) to Target (TGT) have lowered guidance this year following soft summer sales and concerns about the consumer.

According to NRF, the holiday season can account for anywhere from 20% to 40% of a retailer's annual sales, and accounts for approximately 20% of total industry annual sales.

In addition, fiscal concerns around the debt ceiling and government funding, income growth and even policies and actions surrounding foreign affairs, could impact holiday sales, the NRF said.

On top of wary consumers, the length of the recent government shutdown could throw another wrench into the forecast.
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