retailers expect slow start, but solid finish

Last year, consumer spending started strong but finished weak. This year, retailers expect to see that pattern reversed. Spending will likely remain sluggish in the first half of the year, they say, but sales will see a substantial uptick in the second half of 2007. When the dust settles 11 months from now, sales could be up nearly 5 percent over 2006 figures, according to the National Retail Federation (NRF).

At its 96th Annual Convention and Expo in New York City last month, the NRF released its projections for 2007 retail industry sales (which exclude automobiles, gas stations and restaurants). The report projects sales will increase 4.8 percent. "This year, slow economic growth will be reflected in moderate consumer spending and retail sales gains," says NRF Chief Economist Rosalind Wells. "The quarterly industry sales pattern will be the opposite of last year, with modest gains early in the year and better increases in the second half."

According to Wells, industry sales gains of 3.8 percent in the first quarter should increase to 4.6 percent in the second, 5.2 percent in the third, and 5.7 percent in the final quarter.