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Housing, unemployment to drive slower retail sales

Jan 21, 2012 Phil Burgess

Retail sales are expected to climb at a slower pace this year compared to 2011, as continued stagnation in job creation, wage growth and general market expansion discourage consumer from spending in droves. According to a report released Monday by the National Retail Federation, sales are expecting to rise by 3.4 percent in 2012, down slightly from the 4.7 percent surge recorded last year. "Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy," said NRF President and CEO Matthew Shay. "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." Analysts also expect the much-ailed housing sector to stall a major retail recovery. The NRF anticipates home sales and construction will improve mildly this year, with low interest rates and affordability nearing a 30-year high. This will drive many mortgage lenders to ramp up their consumer credit risk management practices. Among other factors stalling retail sales in 2012 are inflation, consumer credit and market confidence, the report notes.