Fears Of A ‘Double-Dip’ Recession Unfounded.

While some investors and analysts continue to raise questions about whether or not the U.S. is still in the midst of an economic recovery, the National Retail Federation (NRF) announced that it remains confident in its prediction of a healthy 6.0 to 6.25 percent gain in GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) for the year. According to its forthcoming Retail Sales Outlook report, NRF cites consumer and government spending, as well as the eventual resumption of business capital investment, as major contributors to the economy’s expansion.

“In spite of some concerns about a “double dip” recession, the economy appears to be soundly on track to recovery,” said NRF Chief Economist Rosalind Wells. “Last year’s one-quarter “mini-recession” led to some fears that, even though economic activity picked up early this year, the recession had not run its full course. We see no signs of a relapse into recession, and believe the economy will continue to grow for the remainder of this year and next.”

While much of that growth will continue to come from consumer spending and housing investment, Wells notes that an upswing in business investment and improvement in the labor markets are crucial keys to a final overall recovery. However, recent signs are already pointing to positive trends in those areas. Business productivity is still rising (and unit labor costs going down), while hiring by temporary employment firms is increasing after months of decline. Although Wells recognizes that recent corporate accounting scandals, the falling stock market, and ongoing war on terrorism still loom in consumers’ minds, she feels strongly that the economy, and retail, are resilient enough to weather these traumas.

In the retail sector, Wells sees an improving picture, as retailers in the GAFS category have made sizeable gains in the first half of 2002. Even apparel specialty stores are bringing in smaller, but markedly improved, sales performances compared to last year. However, some analysts took the disappointing May retail sales figures as evidence that a recovery had stalled.

“We are quite confident that the softer sales pattern in May is not a harbinger of things to come,” emphasized Wells. “We do not believe that these indicators are signaling a stalled recovery. Rarely do economic measures increase in a perfectly straight line without interruption.”

The National Retail Federation (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, employs more than 20 million people — about 1 in 5 American workers — and registered 2001 sales of $3.5 trillion. NRF’s international members operate stores in more than 50 nations. In its role as the retail industry’s umbrella group, NRF also represents 32 national and 50 state associations in the U.S. as well as 36 international associations representing retailers abroad.