Consumers will battle a continued downturn in the housing market, a weakened employment market and high energy and food costs. In addition, inflation rates are increasing, to close to 4.3%, up from 2% early last year. "All of these pressures give consumers anxiety," she said. "We expect consumers to pull back on spending."
For the first half of the year, the NRF is predicting a 3.2% increase in retail sales, and a 3.8% for the last six months. This will be down from an annual average gain of 5% over the last 10 years.
In examining different sectors of the industry, Wells said electronics retailers will have above average sales due to product excitement and attractive pricing. Food, beverage and health-product sales will also do well, she said.
Wells expects that apparel retailers will only have average sales. "There's nothing exciting out there in fashion to stimulate consumer demands," she said. And due to the housing slump, she said home-improvement chains will be hit the hardest.
Wells stopped short of saying that a recession will come this year. "Hopefully retailers will act in a savvy manner, so they concentrate on their core consumers and have the right kinds of merchandise."
Economist and comedian Ben Stein, who spoke during lunch, also said that a recession is unlikely. The economy needs to experience negative growth for a period of at least six months for a recession to take place, he said
"Even when there's a recession, people need shirts, dresses, stereos, high-definition televisions," he joked. Stein called the subprime situation a "mess," but said "it's not big enough to sink the economy."
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