NRF Sees Stimulus Boosting Retail Sales

National Retail Federation here yesterday said it projected a 0.5% decline in retail sales for 2009, factoring in improvements in the second half of the year that could result from increased consumer spending as a result of a massive, government-sponsored economic stimulus program.

WASHINGTON — National Retail Federation here yesterday said it projected a 0.5% decline in retail sales for 2009, factoring in improvements in the second half of the year that could result from increased consumer spending as a result of a massive, government-sponsored economic stimulus program.

“This downward cycle will not be easy to break,” said Rosalind Wells, the chief economist for NRF. It is the first time NRF has ever projected a decline in retail sales, which it has been estimating annually since 1995.

Wells said she expects a decline of 2.2% in the first quarter, followed by declines of 2.8% and 1.1% in the second and third quarters, respectively. The fourth quarter is projected to show a gain of 3.6% over 2008 results, mostly because of comparisons to the weak performance in 2008, when fourth-quarter retail sales were down 1.7%.

“Consumers will continue to spend cautiously,” she said, noting that discounters and club stores should reap some benefit from a continued emphasis on economizing.

The NRF also reiterated its support for a two-pronged economic stimulus program, including investment in infrastructure to create jobs for the long term, and other incentives to spur short-term consumer spending.

As previously reported, NRF is pushing for three sales-tax holidays in 2009 — in March, July and October — to drive consumers into stores and get money flowing in the economy. Under the plan, states would have to agree to waive their sales tax for a period of time, during which the federal government would reimburse them for lost sales tax revenues.

NRF estimated its proposal would cost the federal government about $20 billion, but such tax-free holidays have been shown to be enormous generators of retail spending in the past, the association said.

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