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What fiscal cliff? Shoppers shrug off budget debate

By Jessica Wohl

(Reuters) - The "fiscal cliff" drama that dominated the news and spooked businesses and financial markets did little to dampen spending by shoppers this holiday season.

A new Reuters/Ipsos poll shows nearly three-quarters of Americans said the debate around the fiscal cliff had no impact on their holiday spending. Fewer than 20 percent of those polled said they spent less during the season than they did in the 2011 holidays, according to the poll.

Holiday season sales overall - including December sales data from several chains due this week - were likely good, but not great. The expected rise in 2012 holiday spending is poised to show the smallest year-over-year gain since the recession led to a sales drop in 2008. Various estimates suggest that U.S. sales in November and December combined grew at a low single-digit pace, slower than in 2011 and 2010.

The fiscal cliff was a nearly constant topic in the news, as the country waited to see if politicians in Washington would reach a deal to avoid $600 billion in automatic spending cuts and tax increases.

On Tuesday, the U.S. Congress approved a bill that would raise taxes on the wealthy and preserve certain benefits. The vote averted immediate pain like tax hikes for almost all U.S. households, but did not resolve the issue of raising the federal debt ceiling and fights over the budget in coming months.

Seventy-three percent of those polled in the final days of December said concerns about the fiscal cliff did not affect their holiday spending at all, according to findings from an Ipsos poll conducted for Reuters. Back in mid-November, before the holiday season kicked into full gear, 58 percent of those polled had said the fiscal cliff was not affecting their holiday plans.

Only 15 percent of those polled in late December said they spent less during the 2012 holiday season because of the fiscal cliff. In mid-November, 28 percent said that they planned to spend less because of the fiscal cliff.

Fifty-seven percent of those polled said that they spent the same amount on holiday shopping in 2012 that they did in 2011. Nineteen percent said that they spent less than they did in 2011, while 17 percent said that they spent more.

The poll findings are from an Ipsos poll conducted for Thomson Reuters from December 27 to December 31, with 765 American adults interviewed online. Results are within the poll's credibility intervals, a tool used to account for statistical variation in Internet-based polling. The credibility interval was plus or minus 4 percentage points.

The poll is the latest in a series that Ipsos conducted during the holiday season.

COSTCO APPEARS STRONG, TARGET UNDER PRESSURE

Taking a look at various retailers, discount chains as a group likely saw the strongest sales growth last month, while profits at some retailers may have taken a hit from the need for sharp discounts to clear merchandise from shelves.

"Value and promotions drove consumers to the malls," according to Jharonne Martis, director of consumer research for Thomson Reuters. "Big discounts and promotions could cut into retailers' profit margins."

Costco Wholesale Corp is expected to post a 6.5 percent rise in December same-store sales. While Costco holds the highest estimate of any of the 17 chains included in the Thomson Reuters I/B/E/S tally of analysts' forecasts, the expectations are still below the 7 percent growth the chain posted in December 2011.

Still, some analysts are concerned about how Target Corp fared. The discount chain appeared to struggle with efforts such as its highly touted collaboration of holiday gifts with Neiman Marcus, which Target marked down by 50 percent even before Christmas. On Wednesday, the remaining goods were marked down by 70 percent on Target's web site and by 50 percent on Neiman Marcus' site.

Target forecast a low single-digit percentage increase in December same-store sales and analysts' average forecast was for a 0.8 percent rise as of Wednesday. Jefferies analyst Daniel Binder said he expects such sales were just flat to up 1 percent, while JP Morgan analyst Christopher Horvers cut his expectation to a 0.5 percent increase after calling for a 2.5 percent rise.

Overall, analysts are looking for 3.3 percent same-store sales growth for December across 17 chains, down from 4.2 percent growth in December 2011, according to Thomson Reuters I/B/E/S. Such sales rose a disappointing 1.6 percent in November. In December 2008, same-store sales fell 3 percent, according to Thomson Reuters I/B/E/S.

"December's results will reflect a modest slowdown in overall spending over the past two months ... but the world is not ending," JP Morgan's Matthew Boss said in a note this week.

The weakest December same-store sales are expected to come from teen apparel chain Wet Seal Inc.

Monthly same-store sales tallies exclude major players such as Wal-Mart Stores Inc, Home Depot Inc and Best Buy Co Inc, as well as online leader Amazon.com Inc.

(Reporting by Jessica Wohl in Chicago; Editing by Phil Berlowitz and Tim Dobbyn)

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