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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Retail Group Predicts Sales Dip in '09

A retail trade group this morning predicted that the troubled industry would watch sales drop .5 percent in 2009 as the recession continues to bear down on shoppers.

The National Retail Federation said that the first half of the year would be the most painful, with sales plummeting 2.5 percent compared to last year. It predicted the tide would begin to ebb during the third quarter, which is expected to experience a 1.1 percent decline, before turning a positive 3.6 percent during the fourth quarter.

The group estimated retail sales in 2008 were $2.4 billion. If sales fall this year, it would be the first annual decline since the group began tracking these figures in 1995.

"Most of the consumer behavior we saw in 2008 will continue well into this year," said NRF Chief Economist Rosalind Wells. "Shoppers will be seeking value and trading down to discount and off-price retailers in order to stretch their purchasing power."

The NRF is the retail industry's largest trade group, and its bleak estimate underscores the challenges facing retailers this year. The group also recently released its analysis of holiday spending earlier this month that showed sales down 2.8 percent, another historic drop. The group had predicted that sales would rise 2.2 percent.

"The current economic crisis proved to be more challenging than any had anticipated," Wells said.

--Ylan Q. Mui

By Sara Goo  |  January 27, 2009; 9:30 AM ET
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