By Cotten Timberlake
WASHINGTON - U.S. holiday sales growth slowed by more than half this year after gridlock in Washington soured consumers’ moods and Hurricane Sandy disrupted shopping, MasterCard Advisors SpendingPulse said.
Retail sales grew by 0.7 percent from Oct. 28 through Dec. 24, the Purchase, New York, research firm said yesterday, without providing a dollar figure in the billions. Sales grew at a 2 percent pace in the same period a year ago. SpendingPulse tracks total U.S. sales at stores and online via all payment forms.
Americans became skittish as Washington approached the end of the year without an agreement to forestall higher taxes and automatic spending cuts -- the so-called fiscal cliff. Hurricane Sandy interrupted shopping in stores and online after it slammed into the East Coast in late October. Last month, retailers from Macy’s Inc. to Target Corp. posted same-store sales that trailed analysts’ estimates.
“You are looking at modest to marginal growth from a year ago,” Michael McNamara, a SpendingPulse vice president, said in a telephone interview yesterday. “Weather events and the fiscal debate both anchored the season in terms of growth. The media coverage, which did a good job of explaining the negative consequences of the fiscal cliff, created this negative trend in consumer confidence and spending.”
Consumer confidence fell in December to a five-month low, according to a Dec. 21 report. The Thomson Reuters/University of Michigan consumer sentiment index slid to 72.9, the weakest since July, from 82.7 in November.
Sales in the Mid-Atlantic and Northeast regions, which account for 24 percent of national consumer spending, contracted 3.9 percent and 1.4 percent, respectively, McNamara said. Upper Midwest spending also was hampered by disruptive weather, he said. By contrast, sales in the South and West ranged from about 2 percent to about 4 percent, he said.
Luxury sales “struggled,” pulled down by the New York region, which generates 20 percent of that category’s U.S. sales and was hit hard by the hurricane, McNamara said.
Apparel and consumer electronics sales performed in line with the national average, he said.
The only bright spot was home-related merchandise, which benefited from the housing rebound, he said.
Retailers “sabotaged” themselves by not offering greater discounts in the three days before Christmas, Burt Flickinger, managing director of Strategic Resource Group in New York, said today in an interview with Bloomberg Radio.