Fiscal Cliff Side Effect: Online Sales Miss Estimate

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“The 2012 online holiday season was once again a very strong season with growth rates in the mid-teens as we reached record-setting spending levels. This year’s growth rate is essentially on a par with last year’s. But despite many positives for the online sector, this year’s season did not quite perform up to our initial expectation for growth rates in excess of 16 percent as we fell a billion dollars short of our expected total of $43.4 billion. While November started out at a very healthy 16-percent growth rate through the promotional period of Thanksgiving, Black Friday and Cyber Monday, consumers almost immediately pulled back on spending, apparently due to concerns over the looming fiscal cliff and what that might mean for their household budgets in 2013. With Congress deadlocked throughout December, growth rates softened even further and never quite made up enough ground to reach our original expectation.”

In addition to falling wages and high unemployment levels, consumers were hit with public displays of political rhetoric over the fiscal cliff. The final reading on the Thomson Reuters/University of Michigan’s index on consumer sentiment fell to 72.9 last month, compared to 82.7 in November. It was the lowest reading since July and worse than the preliminary figure of 74.5 released earlier in December. In comparison, consumer sentiment hit a 5-year high in November. Economists polled in a Bloomberg survey expected a final reading of 75, according to a median of 66 estimates…

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