White House reports says fiscal cliff could take bite out of retail spending
Washington — Consumer spending could drop by almost $200 billion next year while depressing real consumer-spending growth by 1.7% if middle-class taxes rise in response to the fiscal cliff, according to a report released Monday by a White House economic team.
The report, “The Middle-Class Tax Cuts’ Impact on Consumer Spending & Retailers,” by the President’s Council of Economic Advisers, found that the reduction in consumer spending would be about four times the total amount spent by $226 million on Black Friday last year and would likely spread across all areas of consumer spending.
The report noted that a typical family making $50,000 per year has received tax cuts totaling $3,600 over the past four years, and more if it was putting a child through college. President Barack Obama and congressional Democrats want tax cuts for families making $250,000 or more per year to expire while keeping in place those for families making less than that, while congressional Republicans want to keep the upper-bracket tax cuts in place.
In response to the report, the National Retail Federation called for steps to avoid the fiscal cliff — the set of tax increases and spending cuts scheduled to kick in automatically at the beginning of 2013 if Congress and the president fail to reach a deal on spending — but also for reforms of the tax code that would help reinvigorate the economy and address the nation’s deficit.
“It is encouraging to see the administration acknowledge that retailers and their customers will be among the hardest hit if our elected officials fail to address ongoing economic uncertainty,” NRF president and CEO Matthew Shay said. “However, just kicking the can down the road by cherry-picking reforms only serves to reinforce the well-placed fears of American consumers and retailers that the status quo will once again rule the day. If brinkmanship overtakes bipartisanship, we will continue to see less capital investment by retailers large and small, stifled job creation and dampened consumer confidence, which will ultimately lead to lower retail sales and potentially another recession.”
NPD finds consumers still entertaining this holiday
PORT WASHINGTON, N.Y. — With the holiday season officially underway, North American market research company NPD has reported its findings on consumers’ holiday entertaining purchases.
The group’s Consumer Tracking Service, which culls data from the past 12 months ending Oct. 2012, found that 63% of housewares consumers enjoy hosting parties in their homes.
“It’s holiday time again, and consumers are ritualistically preparing their homes to entertain this holiday season. Products that furnish seasonal touches and sets that satisfy their need for value are on the menu this year,” said Debra Mednick, executive director of the NPD Group’s home business.
Research shows that though there is a slight increase throughout the years, fewer than half of all housewares items sold are purchased as gifts for someone else. Nevertheless, gift sales of cookware and dinnerware have both increased in share since last year, with cookware being the largest category (40%) with respect to gift-giving dollars within housewares.
Overall, dollar sales of kitchen linens are down, but dining linens are up 5% compared to last year. Kitchen towel sets and towel potholder sets grew by 9% and 24%, respectively. Tablecloths, napkins and placemat/napkin sets all showed growth. Purchases of these for use during the holiday increased 11% in dollars while purchases made for no special occasion increased just slightly.
“Across housewares categories, sets now account for a larger share of market dollars than individual pieces,” added Mednick. “Rather than spending a premium on individual pieces, consumers can get everything they need in a neat package with the added benefit of saving some money.”
NPD’s Retail Tracking Service, which culls data from the past 12 months ending Oct. 2012, found that the top 10 selling dinnerware patterns were winter or holiday-themed. Sets went up 5%, but the formal segment also showed growth with dollar increases of 21%.
The research also showed that sets of beverageware are outpacing the overall category, which is down compared to last year. Wine glasses and serveware such as pitchers, carafes and punch bowls are outperforming as well. Multi-piece flatware sets account for more than 80% of dollars and are outpacing the category as well. The casual segment accounts for about three-quarters of total sales.
Dollar sales for bakeware are up 5%, with value packs and casserole, baking dishes and muffin pans driving much of that growth and accounting for more than a third of total sales. Cookware sets and open stock options account for the majority of the category dollars. Highest performing segments so far this year have been sauce pans, pressure cookers, stir frys/woks, steamers and PTFE/PFOA free products.
Category sales of cutlery are down slightly over last year, but some notable areas with double-digit dollar growth are carving/chef knives, cutlery with soft/comfort grips, 10-piece cutlery sets and eco-friendly cutting boards.
NRF responds to White House report on consumers & retail
WASHINGTON — The National Retail Federation has issued a statement from president and CEO Matthew Shay on the new White House report, “The Middle-Class Tax Cut’s Impact on Consumer Spending & Retailers.”
“It is encouraging to see the Administration’s acknowledgement that retailers and their customers will be among the hardest hit if our elected officials fail to address ongoing economic uncertainty,” said Shay. “However, just kicking the can down the road by cherry picking reforms only serves to reinforce the well-placed fears of American consumers and retailers that the status quo will once again rule the day. If brinkmanship overtakes bipartisanship, we will continue to see less capital investment by retailers large and small, stifled job creation, and dampened consumer confidence, which will ultimately lead to lower retail sales and potentially another recession.”
“The time for talk is over, and the time for action is now,” added Shay. “In order to resolve the larger problem with a stagnant economy, Congress and the administration must take whatever steps necessary to not only avoid the looming ‘fiscal cliff,’ but to reform the tax code, fundamentally and structurally address federal spending and reduce the nation’s deficit. We need leadership from policymakers in Washington, D.C., and a detailed plan based on fact, not fear … on reality, not rhetoric.”