US holiday sales growth worst since 2008

US shoppers spent cautiously this holiday season for the worst year-on-year performance since 2008, a disappointment for retailers who slashed prices to lure people into stores and now must hope for a post-Christmas burst of spending.

Sales of electronics, clothing, jewelry and home goods in the two months before Christmas increased 0.7 percent compared with last year, according to the MasterCard Advisors SpendingPulse report, the first major snapshot of holiday retail sales.

That was below the healthy 3-4 percent growth that analysts had expected - and it was the worst performance since spending shrank sharply during the Great Recession. In 2011, retail sales climbed 4-5 percent during November and December, according to ShopperTrak.

This year's shopping season was marred by bad weather and rising uncertainty about the economy in the face of possible tax hikes and spending cuts early next year. Some analysts say the massacre of schoolchildren in Newtown, Connecticut, earlier this month may also have dented shoppers' enthusiasm.

Retailers still have time to make up lost ground. The final week of December accounts for about 15 percent of the month's sales, said Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse.

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