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NRF: Avoid Fiscal Cliff or Retail Sales Will Contract

Expect Sales +2% Next Year if Deal Is Reached

Dec 20, 2012 3:50 PM   By Jeff Miller
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RAPAPORT... The National Retail Federation (NRF) estimated that U.S. retail sales in 2013 would fall flat for the year, following a contraction in the first half, if middle-class tax increases go into affect as a result of inaction on the so-called fiscal cliff. However, if Congress and the White House reach a deal to avoid automatic tax increases on December 31,  the NRF's chief economist, Jack Kleinhenz, estimated that retail sales would increase 2 percent to 2.5 percent year on year for 2013. The House is set to vote tonight on a ''Plan B,''  which would prevent a hefty automatic tax increases for most U.S. incomes.

“Although [Plan B] may not be the perfect solution to the fiscal crisis, what’s important is that Congress provide certainty going into the new year on tax issues that will impact every American,” said NRF's president, Matthew Shay. “Worries over the economy have already affected consumers during the holiday season. Worries coupled with actual tax hikes and spending cuts add up to a disaster our economy cannot afford.”

The NRF said that it had not taken a position on specific details of the legislation, but the group believes passage will help assure the public that lawmakers are addressing the issue.

Additionally, “there are a number of issues facing the economy, retailers and consumers that require a commitment beyond the fiscal cliff,” Shay said. “We need to avoid going over the fiscal cliff, but Congress and the White House also need to develop long-term plans that will restore consumer confidence so that the business world can go back to investing capital and creating jobs.”

Tags: Jeff Miller, nrf fiscal cliff house vote tax increases retail
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