| NRF's Retail Sales Outlook Predicts Economic Recovery Toward End of 2001 |
The National Retail Federation (NRF) says the U.S. economy is not in a recession
and is anticipating an upswing in consumer behavior toward the end of 2001,
leading into a "U" shaped recovery for the current economic slowdown.
Writing for NRF's Retail Sales Outlook, NRF Chief Economist Rosalind Wells said, "Although the economy was unquestionably weak in the first few months of 2001, we see signs that the malaise will end and that economic activity will improve in the second half of the year."
Wells pointed to several factors for her positive long-term outlook including a stable housing market, the Federal Reserve's multiple interest rate cuts that will likely spark refinancing activity and put more money in consumers' pockets, and a still-positive job market.
According to the Retail Sales Outlook, NRF's quarterly economic forecast, the contrast between the economy being in overdrive and screeching to almost a standstill is what is causing the pain. Wells said the lack of a true decline in economic activity and the positive employment and income picture supports her assertion that the U.S. has avoided a true recession.
Wells observed that the economy likely would not experience a fast bounce back, described by some economists as a "V" shaped recovery. Rather, the economy will probably evince a "U" shaped recovery, with a few more quarters of growth below the economy's potential -- about 3.0 percent -- followed by stronger results toward the end of the year.
Wells expects total consumer spending to grow 3.0 percent this year, less than the 5.3 percent of the last two years but still solid. She also predicted that GAF sales (general merchandise, furniture and home furnishings) will grow 4.2 percent for 2001, compared to 6.8 percent in 2000.
In general, Wells does not expect a sharp re-acceleration in the economy, rather a gradual improvement. However, she remains upbeat about the retail industry's prospects in the near term.
"Retailers will be faced with the challenges of less robust growth, but opportunities to excel will exist for those who factor the environment into their plans."
The National Retail Federation (NRF) is the world's largest retail trade association with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores. NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people -- about 1 in 5 American workers -- and registered 2000 sales of $3.2 trillion. NRF's international members operate stores in more than 50 nations. In its role as the retail industry's umbrella group, NRF also represents 32 national and 50 state associations in the U.S. as well as 36 international associations representing retailers abroad. For more information about NRF, visit the web site at http://www.nrf.com.
Source: NRF
press release, April 12, 2001
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