Upbeat Outlook

The National Retail Federation's (NRF) chief economist predicts the economy will begin to recover in the first quarter of 2002.

“There is little doubt that the terrorist attacks of September 11 weakened an already fragile economy,” Rosalind Wells writes in the latest edition of the Retail Sales Outlook newsletter. “However, three months later it is also evident that the flexible U.S. economy has enormous staying power. There are many encouraging signs that economic activity is poised to expand once again.”

Citing several factors — such as low interest rates, falling energy prices, low inflation, mortgage refinancing and a rebound in the stock market — Wells expects retail sales in the GAFS category (general merchandise, apparel specialty, furniture, home furnishings, electronics, appliances, and sporting goods, hobby, book and music stores) to increase 3.7 percent in 2002, compared to the 2.2 percent gain seen in 2001.

Although the U.S. economy has been in a recession since March 2001, Wells credits consumers for showing resilience in the face of uncertainty.

“Consumers'reactions and spending patterns since September 11 are good clues as to what to expect in the future,” said Wells. “While spending definitely slowed, it did not collapse. In fact, consumers were very responsive to sales incentives.”

Washington, D.C.-based 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.