It was bound to happen. Analysts are bitching the fiscal cliff is holding back retail spending.
Please consider "Fiscal cliff" spooks shoppers in last lap of holiday race.
Fears about imminent tax hikes and cuts in government spending are taking a toll on U.S. shoppers and could deprive retailers of a strong finish to the 2012 holiday shopping season.Ho-Hum This
The acrimonious debate in Washington over how to avoid the so-called "fiscal cliff" has cast a pall over shopper sentiment as consumers head to malls on the last Saturday before Christmas - typically one of the busiest shopping days of the year.
About 17 percent of the 1,514 Americans who participated in a Reuters/Ipsos poll conducted December 17-20 said the impending "fiscal cliff" was making them spend less this season.
"We just try to stay on a budget. We're not going crazy," said Tom Chowinski, a market researcher at Nielsen, who was shopping with his wife for their four adult children on Saturday morning at a Wal-Mart store in Westbury, New York.
"What could have been a merry Christmas is going to turn to a ho-hum Christmas, and we can thank our, you know, politicians for getting in the middle of it all," NPD analyst Marshal Cohen said. "This great unknown puts a big damper on the consumer feeling confident to go out and spend more."
More than 60 percent of U.S. consumers have already finished more than three-quarters of their holiday shopping, according to a Reuters/Ipsos poll released on Thursday. This means retailers will have to offer deeper discounts to force Americans to open their wallets in the last lap of the holiday race.
As far as I am concerned, people spending less for Christmas is a side "benefit" of the fiscal cliff. The Government needs to tighten its budget and consumers do as well.
For those who do go on a last minute spending spree, who doesn't want lower prices (other than retailers and NPD analyst Marshal Cohen)?
Tough times will return (not that they ever left in the first place for millions of Americans), and the last thing people need to do is overspend on junk that will be thrown out in a month or items dear Aunt Suzie will donate to the Salvation Army.
Mike "Mish" Shedlock