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MARKET REBOUND measure up to economists' expectations. Indeed, when numbers are finally tallied, the GDP increase is expected to weigh in at around 1.6% for the year, well below the anticipated 2.1% rate. What went wrong? "Global weakening, which has led to much weaker growth in exports, and government dysfunction has resulted in weaker than expected growth," says Koropeckyj. During the last 12 months the nation was also weighed down by a fiscal drag that is not expected to be as severe in 2014. This drag consisted of the end of the socialsecurity tax holiday, the tax increases on upper income households, Affordable Care Act-related tax increases and a significant reduction in government spending. "While there will be some fiscal restraint next year as well, we expect it to be reduced to a level that the underlying strength of the economy comes through," says Hoyt. RETAIL SALES GROWTH So how are shoppers feeling about all this? Fairly optimistic, if current indicators are reliable. "Core retail sales are expected to grow 3.8% by the time 2013 figures are finalized, and by 4.5% in 2014," says Hoyt. That's a pretty good showing, given that average annual core retail sales grew at 4.6% prior to the 2008 financial crisis. (Core retail sales exclude volatile revenues from auto sales and gas stations.) Keep in mind, however, that these numbers are not as high as the 4.9% figure clocked in 2012 and the 5.4% of 2011. What's going on? "A lot has to do with continued weak income growth," says Hoyt. "While we do have some job growth, there is continued high unemployment. A lot of people have dropped out of the labor force, and employers have more power to restrain wage growth." No rapid relief in that sluggish employment picture is within sight. Moody's expects the current unemployment rate of 7.3% to slowly decline to 6.7% by the end of 2014. A "full unemployment" 5.5% figure is not expected to be reached until early 2017. Until then wages will be constrained. Indeed, many consumers are still suffering from the restrained incomes characteristic of a sluggish employment market. "Some retailers have been telling me that shopping activity tends to fall off dramatically toward the end of each month," says Walter Simson, principal of Chatham, New Jersey-based Ventor Consulting (ventorllc.com). "This seems to indicate that many people are living hand to mouth. While they are willing to spend for what's necessary, there's a big part of the population that has no extra gas in the tank. This pattern has to be broken for any dramatic improvement to occur in the economy." Retail sales, though, should be bolstered by the improved condition of shoppers' pocketbooks. Consumers have followed the banks in their drive to strengthen balance sheets. "Consumers have repaired their credit and are willing to put a little more on their credit cards," skincare The more optimistic outlook is reflected by an anticipated rebound in the nation's Gross Domestic Product or GDP. That figure, the most commonly accepted indicator of economic health, represents the nation's total annual revenue for all goods and services. The higher the GDP the more likely shoppers will open their wallets wider and cash registers will ring more often. So what's the GDP doing now? In 2014 the nation's economy is expected to climb at a 3.1% rate, according to Moody's. That's good news, given that the GDP increase for an economy in average growth mode is 2.5%. "We think things should be looking up considerably [in 2014]," says Scott Hoyt, senior director of consumer economics for Moody's. "The economy should be significantly better not only than the past 12 months but also the past several years." Maybe it's expected to increase rapidly, but the 2014 GDP number is being calculated off a pretty low base. Many retailers won't be surprised to hear that 2013 did not ONE skincare offers bestselling ONE, the Ten in ONE facial cream and our new ONE, The Universal Skin Cleanser. ONE Cleanser: All in ONE sulfate free lotion cleanser that gently removes eye & face makeup, combination cleanser and shave lotion in one step, cleansing for the whole family. ONE Cream: All in ONE cosmetic primer that minimizes surface lines and pores, offers matte finish, vitamin/anti-oxidant/mineral/protein packed day/nighttime treatment for all skin types. For distribution inquiries, please contact: J. J White & Associates • (704) 335-1502 • orders@jwhite-assoc.com 40 January 2014 | beautystorebusiness.com