The National Retail Federation insists that the U.S. economy is not in a recession. What's more, the NRF says it anticipates an upswing in consumer behavior toward the end of 2001, leading into a “U-shaped” recovery for the current economic slowdown.
The federation's chief economist, Rosaline Wells, said in the NRF Retail Sales Outlook (its quarterly economic forecast), “We see signs that the malaise will end and that economic activity will improve in the second half of the year.” Among those signs are: 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. What's causing the pain, says Wells, has been the contrast between the economy first being in overdrive and then screeching to almost a standstill. 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.
A U-shaped recovery is slower and more gradual than a V-shaped, fast-bounce-back, recovery. There are likely to be a few more quarters of growth below the economy's potential (about 3 percent), followed bystronger results toward the end of the year. The 3 percent consumer spending growth Wells is expecting is less than the 5.3 percent of the last two years, but she nonetheless regards it as 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.
“Retailers will be faced with the challenges of less robust growth,” she writes, “but opportunities to excel will exist for those who factor the environment into their plans.”