NEW YORK — The economy will gradually pick up steam throughout 2008, and — despite a very slow start — might not slip into a recession, the National Retail Federation predicted at a press conference here last week.
“Interest-rate cuts and an economic stimulus package from the federal government could help things in the second half,” said Rosalind Wells, chief economist for NRF, speaking at a press conference at the association's Big Show here last week.
Later in the week, the NRF board of directors issued a resolution calling for Congress and President Bush to quickly devise a plan to induce consumer spending.
“The nation's economy is in a slowdown,” the resolution said. “Consumers will be under continued financial stress in 2008 as a result of high energy costs, the fallout from the housing slump, sluggish employment and income growth.”
Speaking at the press conference, Wells predicted that consumer spending overall in 2008 would rise only 2% over 2007 levels, when spending was up 2.8%.
That will translate into a difficult year for retailers, especially in the first half. Wells projected that retail sales would grow about 3.2%, year-over-year, in the first half of 2008, but could accelerate to 3.8% in the second half, for overall growth of 3.5% in 2008. That compares with estimated 4% growth in 2007 and represents the slowest growth since 2002, when sales rose only 3%.
She noted that retail sales have had a strong run for the past few years, and that the projected slowdown for 2008 will be manageable for the retail industry.
“It's not falling off a cliff to go from 4% to 3.5%,” she said. “It's a slowdown, and we've had worse.”
Wells said she expects that Bush could unveil a plan to stimulate the economy — possibly a tax rebate for consumers and some breaks for businesses as well — during this month's State of the Union Address. That, combined with expected interest-rate cuts from the Federal Reserve, could provide enough impetus for a second-half rebound in retail sales, she said.