Retail sector expected to grow 3.4 percent in 2012
For some retailers, 2011 ended on an auspicious note – while sales were up through the end of the final two months of the year, many struggled to profit due to rampant discounting and had to adjust their financial projections as a result.
Still, 2012 is expected to be a booming year for those in the sector. According to a new report from the National Retail Foundation, while high unemployment rates and the uncertain economic environment will continue to impact sales, the industry is expected to grow a marginal 3.4 percent throughout the 12-month period.
This year, retailers are forecasted to generate $2.53 trillion. While that's slightly lower than the 4.7 percent recovery observed in 2011, it is still an improvement, which is crucial considering the economic climate. At the same time, economists estimate that real U.S. GDP will grow approximately 2.1 to 2.4 percent.
As NRF president and CEO Matthew Shay notes, the retail sector has been on the forefront of the economic recovery for the past 18 months. The sector has created hundreds of thousands of jobs, encouraged further consumer spending and provided a variety of investor opportunities during this timeframe.
"Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Retailers have played a key role in driving growth, but to continue this momentum we need Washington to act on proposals that will spur job creation and unleash the power of the private sector," Shay explains.
Several factors are contributing to the recovery of the booming retail sector. Unemployment reached a three-year low at the close of the 2011 calendar year, the annual income of many Americans is on the rise thanks to Congressional cuts in payroll taxes and the easing of lending standards is encouraging many consumers to spend more money.
According to a separate NRF report, the retail sector is expected to come into full bloom in spring. Container traffic, which shows how much inventory companies are stocking, was observed to be flat in January compared to last year. However, in March, this figure is expected to jump 10 percent year-over-year.
