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Retailers Warn Congress on 'Fiscal Cliff'

The National Retail Federation, which lobbies on behalf of companies such as Macy’s and Kohl’s, today predicted solid growth for the upcoming holiday season. But the trade group warned lawmakers that the “fiscal cliff” of looming tax increases and spending cuts could hurt consumer spending at a critical time for the industry.

“Congress’ inability to act on the key measures that would ease consumers’ fears … really could be best described as the Grinch that stole Christmas,” NRF’s president Matt Shay said during a conference call with reporters. The political wrangling over the fiscal cliff, he added, “could jeopardize how this holiday season plays out.”

The retail association forecasts holiday sales this year will increase 4.1 percent, to $586.1 billion, which Shay called the group’s most optimistic prediction since the recession. It’s still below last year’s actual holiday sales of 5.6 percent growth, he added.

The sector also is likely to add about 600,000 jobs for the season, he said. “Santa’s helpers are going to be on the hook for some overtime this year,” he said.

But he noted that consumer anxiety over the economy remains with fiscal and political uncertainties, high unemployment and minimal income growth.

Gridlock in Washington, D.C., he said, has a chilling effect for consumers.

NRF’s chief economist, Jack Kleinhenz, said the political uncertainty and jitters are real, according to data compiled for the group by market research firm BIGinsight. “They do influence spending,” he said. But he noted that other factors such as the weather will play a role in retailers’ success.

Shay said the group may reassess its holiday predictions and added that forecasting the holiday season “is like tracking a hurricane.”

One sure bet, though, is that consumers will do more shopping online using tablet computers and smartphones. One of NRF’s policy priorities is legislation that would compel states to collect sales tax from online retailers.

“Online retail has been a bright spot for years, and we don’t expect that trend to change anytime soon, especially with the growth in mobile,” Shay said.

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