By  on September 20, 2007

The volatile financial and weak housing markets, credit crunch and wobbly consumer confidence are bringing down holiday sales expectations.

Although retail results were generally positive most of the summer, the National Retail Federation trade association believes U.S. stores can expect holiday sales to rise 4 percent to $474.5 billion. That's significantly below the 10-year average of 4.8 percent, and the slowest holiday sales growth since 2002, when sales increased a mere 1.3 percent. Last year, holiday sales rose 4.6 percent, to $456.2 billion.

"Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles," said NRF chief economist Rosalind Wells in a statement Wednesday. "With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending....This could spell trouble for discounters and some department stores whose shoppers may be looking to trade down." The NRF believes luxury retailers should continue to fare well, while retailers catering to low- and middle-income consumers will have the toughest time.

Wells and the NRF base their forecast on back-to-school trends, recent monthly sales patterns, wage rates, the housing market, employment levels and other economic factors. The analysis includes all retailers except for auto, gas, food and beverage retailers.

The NRF defines holiday retail sales as those occurring in November and December. The NRF measures total sales, not comparable-store sales.

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