The economy fell at the sharpest rate in nearly three decades in the fourth quarter of last year, and the Economic Advisory Committee (EAC) of the American Bankers Association says it believes the economic downturn will continue through the first half of 2009 before rebounding in the second half. It’s a perspective the National Retail Federation (NRF) apparently shares.
The EAC, which provides perspectives on the national and local economies to top policymakers, met last week for the first of two meetings scheduled this year. Members of the committee represent 13 of the largest lending institutions in the nation.
“Conditions have deteriorated considerably since the committee met in June,” said Bruce Kasman, committee chair and chief economist for JP Morgan Chase, New York. “With consumption contracting and job losses intensifying, it is unlikely that the picture will brighten soon.”
Kasman says the EAC believes the first half of ’09 will be marked by consumers continuing to retrench, saving more, spending less, and further weakening demand for goods and services.
Nobody needs to tell that to the NRF, which says it sees more challenges ahead as consumers continue to shift their spending priorities.
The NRF, in its 2009 economic forecast released today, projects retail industry sales in 2009 will decrease 0.5% compared to 2008.
“Most of the consumer behavior we saw in 2008 will continue well into this year,” said NRF chief economist Rosalind Wells. “Shoppers will be seeking value and trading down to discount and off-price retailers in order to stretch their purchasing power.”
The NRF says it expects first half sales to decline 2.5 percent before rebounding 3.6 percent in the fourth quarter due to easy comparisons to last year as well as a general strengthening of the economy.
- Submitted by Guido Ebert