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Associated Press
A sign advertises a holiday sale at a Massachusetts mall last Christmas Eve. Retail sales this season are projected to be up 3.9 percent over last year, but the federal government shutdown could weaken consumer confidence.

Holiday retail sales may rise 4%

Government shutdown could hurt totals

– Retail sales may increase 3.9 percent during the holiday season, as political and economic uncertainties dampen consumer confidence, the National Retail Federation said Thursday.

Sales may rise to $602.1 billion in November and December, Washington-based NRF said in a statement. The increase is slightly higher than last year’s 3.5 percent gain and the 10-year average of 3.3 percent, NRF said. Stores may hire 720,000 to 780,000 seasonal employees, compared with 720,500 last year, the group also said.

The first partial government shutdown in 17 years and the prospect of a lengthy budget fight could jeopardize the economic recovery and cool consumer sentiment, the auto market and sales of luxury goods.

“We’re in for what could be a solid season, but we have to let the folks in Washington get out of their own way a little bit to let that happen,” NRF President Matthew Shay said.

Online sales will rise as much as 15 percent to $82 billion in November and December, the NRF’s Shop.org arm projected. That would compare with an increase of 15.5 percent in e-commerce sales in the fourth quarter of last year, the NRF said, citing Commerce Department data.

In addition to the political uncertainty, consumers are contending with an increase in the payroll tax and rising mortgage rates. While lower-income households have restrained purchases this year because of the increase in payroll tax, Shay said shoppers at all income levels this season will focus on value, whether in the form of discounts, quality or service.

To draw in shoppers, retailers may begin offering promotions as early as Nov. 1 this year to take advantage of a shorter holiday season, according to Chicago-based researcher ShopperTrak. This year, there are 25 days between the day after Thanksgiving – known as Black Friday – and Christmas, compared with 31 days in 2012, and four instead of five weekends.

Sales in November and December account for 20 percent to 40 percent of U.S. retailers’ annual revenue, according to the NRF.

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