Retail traders in the US continue to sweat over the possible fiscal cliff – with deadline fast approaching and the government, lawmakers no closer to a breakthrough.

A proposed fallback plan introduced by the House of Representatives speaker John Boehner couldn’t muster enough votes fro passage and brought the discussions back to square one.

Speaker Boehner suggested relatively smaller tax increases for high income groups but the proposal to secure enough votes – a move which would have brought everyone one step closer to avoiding the fiscal cliff.

US Congress-backed tax exemptions cease to be vaild from 1 January 2013 and the failure to reach a deal could mean greater tax liabilities and lower consumer spending.

The US National Retail Federation had earlier welcomed the pending-vote and urged White House for a commitment beyond fiscal cliff citing the major issues concerning the economy, retail sector and consumer groups.

In an analysis conducted by the trade group, it was revealed that the retail sales of 2013 would jump by 2% – 2.5% if fiscal cliff is avoided.

Commenting on the issues looming over US economy, NRF President and CEO Matthew Shay said that the government needs to initiate long term plans to hold back consumers confidence to ensure continual capital investments and job creations.

"Worries over the economy have already affected consumers during the holiday season.

"Worries coupled with actual tax hikes and spending cuts add up to a disaster our economy cannot afford," explained Shay.