Holiday Shopping Forecast Reflects Tight Finances Forecasts of the holiday shopping season have been less than reliable in the past, but economists and retail groups keep issuing them anyway. This year, the forecast sounds familiar: high gasoline prices and the housing slump will mean an anemic shopping season. Is this the year the forecast may be right?
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Holiday Shopping Forecast Reflects Tight Finances

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Holiday Shopping Forecast Reflects Tight Finances

Holiday Shopping Forecast Reflects Tight Finances

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MICHELE NORRIS, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

This weekend, as with every other Thanksgiving weekend, there will be lots of people watching the stores and their sales numbers.

NPR's Jim Zarroli reports there are already some signs that this holiday season may be a disappointment for retailers.

JIM ZARROLI: It's the most wonderful time of the year - at least if you're a retail forecaster. There's always a fair amount of prognosticating in November about how much people will spend over the holidays. But the truth is…

Mr. HOWARD DAVIDOWITZ (Chairman, Davidowitz & Associates): We can't predict that accurately. I can't. I'll tell you that much.

ZARROLI: That's Howard Davidowitz who heads a retail consulting and investment banking firm.

Mr. DAVIDOWITZ: You see a lot of numbers going around and people putting on a lot of - putting out a lot of numbers. They don't look to me like they tie into anything real.

ZARROLI: The National Retail Federation, Deloitte & Touche, and the consulting firm TNS Retail Forward have all issued predictions about retail sales this year. They're looking at increases ranging from 3.3 to 5 percent. One reason these numbers vary is that they tend to look at different data, says Malachy Kavanagh of the International Council of Shopping Centers.

Mr. MALACHY KAVANAGH (Spokesman, International Council of Shopping Centers): It's important to know what's included in their models. Some include restaurant sales, some include gasoline sales, ours is strictly a retail sales.

ZARROLI: But Kavanagh says the projections this year all have one thing in common. All of the prognosticators believe that retail sales will grow more slowly this year than they did last year.

Mr. KAVANAGH: All of the indicators from all the various different organizations do point that it's going to be less of a holiday season than in years past.

ZARROLI: Kavanagh is not saying there's going to be less holiday cheer. He's just saying that most stores are expecting weaker sales growth. The downturn in the housing market is one big factor. Energy costs are another. So how much will people spend this year?

Ms. CASEY HARTWIG(ph) (Shopper): Probably not quite as much as last year. So probably like couple of hundred dollars less. In part, because of gas prices and just everything, more cost this year in general.

Ms. CARRIE BLIDA(ph) (Shopper): This year I'm finding myself doing - struggling much more than I did last year, especially with the gas prices. That's really cutting into a lot of extra spending.

ZARROLI: That was shoppers Casey Hartwig of Pittsburgh and Carrie Blida of Holyoke, Massachusetts.

Howard Davidowitz says he thinks that with gas prices rising and home prices falling, consumers are going to be pulling back a lot this year. Total industry sales will probably grow, but only because there are more stores than there were last year. But Davidowitz says a lot of individual change have already seen drops in the same store sales over the past few months.

Mr. DAVIDOWITZ: Macy's, the largest traditional department store, was down. Penny's was down. Kohl's was down. Gottschalks was down. Bon-Ton was down. Limited was down.

ZARROLI: And Davidowitz says that when same store sales fall in a given year, holiday sales tend to follow. Still, retailers can take comfort from a couple of things. First, because of the vagaries of the calendar, the shopping season is a bit longer this year. And two, a lot of people predicted the consumers would begin to bail on the stores last year and the year before. Both times, the January headlines were all about the unexpectedly strong retail season. American consumers have defied expectations before. The question this year is whether they can do so again.

Jim Zarroli, NPR News, New York.

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