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Holidays Could Be Retail Sales Rollercoaster

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    NEWSLETTERS

    High unemployment, low consumer confidence, and a sluggish housing market have taken their toll on retail sales in recent years but there are still many reasons to remain optimistic things will improve this holiday season, according to an industry analyst. (Published Wednesday, Nov 9, 2011)

    High unemployment, low consumer confidence, and a sluggish housing market have taken their toll on retail sales in recent years but some are optimistic things may turn around this holiday season.

    Analysts have been putting together holiday-growth projections, and most numbers have been gaining in the 3 to 4 percent range.

    "All things considered, we're in pretty good shape," said Matthew Shay, CEO and president of the National Retail Federation. Inventories are up over last year and retailers are expected to hire nearly a half a million people, he said.

    But cautious consumers, high taxes and increased regulation combined with a nagging recession has put a strain on business.

    "Lots of people are out of work," said Shay. "It's made it very tough. In 2008 and 2009 we had particularly difficult years where sales actually dropped for the first time in history."

    In addition, the United States has the highest corporate tax code in the world and retail businesses pay the highest effective tax rate—nearly thirty four and a half percent, Shay said. In addition, retailers are faced with more regulatory burdens than ever before.

    "The last thing that a business needs at a time like this is a tax increase," Shay said. "Similarly, the last thing a business needs is additional regulatory burdens and obligations.

    The retail industry is made up of more than 3.6 million U.S. establishments and employ nearly 25 million workers, generating $2.5 trillion in annual sales.

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