As per a forecast by the National Retail Federation USA, retail sales in 2008 are expected to rise at their slowest pace in 6 years. The trade group expects retail industry sales, which exclude automobiles, gas stations and restaurants, to increase by 3.5 per cent from last year. That would be the lowest growth since 2002, when sales rose 3 per cent. Consumers are expected to buy less discretionary items and more of staples. Sales of big-ticket items, like furniture, are expected to face pressure in 2008, while popular electronics may fare better. Apparel should have an "average" year unless a big fashion trend hits.
For the past few years, luxury retailers have been on a roll since the high-income customer continued to spend despite rise in gasoline and food prices. However, now amid an uncertain economic environment, the cracks are beginning to show.
Upscale jeweler Tiffany & Co has cut its fiscal-year earnings outlook after same-store sales fell 2 per cent in the USA during the November-December holiday period.
Economists are debating whether the economy in USA will slip into recession this year due to record high energy prices, a volatile financial market and the weakest housing market in years, taking a toll on construction, consumer spending and credit markets.