Shoppers disappoint retailers this holiday season

U.S. holiday sales so far this year have been the weakest since 2008, when the nation was in a deep recession. That puts pressure on stores that now hope for a post-Christmas burst of spending. This year’s holiday season was marred by bad weather and uncertainty about the economy in the face of possible tax hikes and spending cuts early next year. Some analysts say the massacre of schoolchildren in Newtown, Conn., earlier this month may also have chipped away at shoppers’ enthusiasm. Sales for the two months before Christmas increased 0.7% compared with last year, according to a MasterCard Advisors SpendingPulse report. That’s way below the healthy 3% to 4% growth that analysts had expected—and the worst year-over-year performance since 2008, when spending shrank sharply during the Great Recession. But stores still have some time to make up lost ground. The final week of December accounts for about 15% of the month’s sales, says Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse. And the day after Christmas typically is among the biggest shopping days of the year. Holiday sales are a crucial indicator of the economy’s strength. November and December account for up to 40% of annual revenue for many retailers. If those sales don’t materialize, stores are forced to offer steeper discounts. That’s a boon for shoppers, but it cuts into stores’ profits. The full story can be found here.