Retail sales estimates for the holiday selling season are starting to trickle in, and they ain't looking pretty.
MasterCard's Spending Pulse unit estimates that retail sales grew a meager 0.7 percent year over year from October 28 through December 24, compared to a 2.0 percent gain in 2011.
It seems the Grinch put a damper on retail sales this holiday selling season. (Image credit:... [+]
Meanwhile, ShopperTrak, which bills itself as the world's largest counter of retail foot traffic, reported that for the week ended Dec. 22, retail sales declined 2.5 percent as foot traffic fell 3.3 percent compared to the same period last year.
So what went wrong this holiday season? A drumbeat of negative news -- the inability of president Obama and congressional Republicans to come to a resolution on the fiscal cliff, the devastation from Hurricane Sandy, as well as the Newtown shootings -- cast a pall on spending this holiday season, experts theorize.
"It's possible that economic concerns and hurricane Sandy dampened excitement, as consumers are understandably reticent to spend if they don't know the potential impact on their finances," Chris Donnelly, managing director of Accenture's retail practice, told Forbes.
Indeed back on November 14, the president warned that if the White House and Congress failed to come to a swift resolution to avert the fiscal cliff -- which would result in higher taxes on the entire population and drastic spending cuts to federal agencies come Dec. 31 --"that's going to be a pretty rude shock for [middle-income families] and I suspect will have a big impact on the holiday shopping season,” he said.
Although it's hard to know just yet what kept shoppers from spending heartily this holiday season, it seems president Obama's prediction might have come true.
"Santa's sleigh was light this year, as early results from last-minute Christmas shopping point to soft sales despite unplanned promotions," Deborah Weinswig, a retail analyst with Citi, said in a research note.
"We believe retailers resorted to unplanned promotions in the final weeks of the season to overcome high inventory levels and fragile consumer confidence around the fiscal cliff."
