Retail sales forecast to rise, but not as much

The National Retail Federation on Monday forecast that U.S. retail sales will rise 3.4 percent in 2013, a pretty lukewarm number, and below the 2012 amount of 4.2 percent.

The forecast excludes automobiles, restaurants and convenience stores, but includes all other retail operations.

On the plus side, the federation said, income growth and hiring remain positive, although slow. But consumers will spend more conservatively early in the year because of the unsettled atmosphere surrounding federal spending and tax issues, plus the impact of the increase in Social Security taxes, which returned to a higher rate Jan. 1.

“While it’s too early to know the full effect of higher payroll taxes, there’s no question that many consumers will feel some kind of impact from the change in their paychecks,” federation chief economist Jack Kleinhenz, said in a statement. “That said, consumers have in the past shown a resiliency in the face of uncertainty, and we expect those impacted to adjust to smaller budgets by trading down or simply cutting back on certain items. Overall we foresee some improvements in the second half of the year should the outlook for job creation and income growth improve.”

Online sales are expected to rise between 9 and 12 percent, the federation said.

Local merchants overall can probably expect something similar, agreed Jeremy Hill, director of the center for Economic Development and Business Research at Wichita State University.

Hill said he also expects the first half of the year to be particularly slow because of the debates about spending and taxes in Congress. By the second half of the year, he said, the net effect of continued growth will prompt more spending

“As the employment situation improves, we’re seeing more who are underemployed move to positions that are appropriate for their skills, so there is better matching in the labor market,” he said.

He downplayed the impact of the payroll tax on Kansans because of a partial offsetting impact of cuts in the state’s income tax. Once they get their tax refunds, they’ll forget about the smaller amount in their paychecks.

“The average person in Kansas won’t see much net effect,” he said.

Each business is different, of course. Some are seeing strong gains while others struggling to stay open.

Upscale clothing store Johnston’s Clothiers is somewhere in the middle.

Owner J.V. Johnston said he is buying inventory on the assumption of 2 to 3 percent growth this year, based on slow growth in the local economy and continued doldrums in much of the local aircraft industry.

“Our big hope is Koch Industries,” he said. “I can name you the day they gave out bonuses. They’re adding jobs, really good jobs.”

Lonnie Bosley, owner of Bosley Tires, is aiming toward the other end of the economic spectrum.

Bosley Tire is adding a financing program for its tires to encourage more low-income buyers to buy higher quality tires. He said he expects 20 percent growth in sales from the program.

He is also close to completing a deal to add a new Bosley Tire location at Kellogg and Maize.

“We’re planning on it,” he said.