NEW YORK — Holiday sales are expected to grow at the slowest pace in five years as shoppers fret about jobs, tight credit and slumping home prices, according to a forecast from the world's largest retail trade group. That could mean lower prices and big pre-Thanksgiving sales blitzes as merchants compete for a piece of the holiday budget.
The National Retail Federation predicted Thursday that total holiday sales will be up 4.0 percent for the combined November and December period, the slowest growth since a 1.3 percent rise in 2002.
Holiday sales rose 4.6 percent posted in 2006 and growth has averaged 4.8 percent over the last decade.
NRF's total retail sales figures exclude business from auto dealers, gas stations and restaurants. The results also exclude online sales.
"I think consumers will be cautious," said Rosalind Wells, chief economist at the NRF. "The average person will be a little more restrained. It's not to say they will stop buying Christmas gifts, but the spending will be more practical."
A big issue, according to Wells, is the job market, which showed its first drop in job creation in four years in August.
"Everyone knows the housing market is terrible. The big issue will become employment and income," she added.
Amid such economic challenges, Wells said stores could be even more aggressive about price cutting than last year.
Chris Donnelly, a partner in the retail practice at consulting group Accenture, said a key question is whether many stores will offer deep price cuts traditionally reserved for the Thanksgiving weekend before the holiday kickoff.
"The Thanksgiving holiday season is a bit of a firewall. The question is, will (stores) jump that fire wall?" he said.
Consumer spending growth has been slowing since the beginning of the year as shoppers have been hit with higher gas and food prices and a slowing housing market.
Back-to-school sales were solid, but escalating problems last month in the credit market, rising defaults and financial market turmoil raised more concerns about consumer spending.