Following a year of bumpy growth, the economy is poised for consistent gains in 2004. The National Retail Federation (NRF) released its 2004 forecast on Monday, predicting that GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) will increase 5.0 percent from last year. According to its Retail Sales Outlook Report, NRF cites gains in consumer income and low inflation as major contributors to growth in 2004.
“This year will see more balanced economic growth with solid consumer spending and accelerating business investment,” said NRF Chief Economist Rosalind Wells. “As employment expands and wages and salaries firm, a broader spectrum of consumers will be in better financial shape which should help lift sales more evenly across the board.”
Much of the anticipated growth this year is attributed to continued momentum that began in the second half of last year. “In the second half of 2003, consumers played their part with hefty spending increases and businesses kicked in with strong investment spending,” said Wells. “Even government spending and trade contributed to the economic party.”
Several factors will lead to moderate growth in 2004. Inflation is low and will stay modest–even though there is increased strength in the economy, prices are not expected to move up significantly in the near future. Also, interest rates are expected to remain low and the stock market and home values continue to increase.
Additionally, the job market continues to improve. After seven straight months of job loss in early 2003, job creation occurred for four consecutive months starting in August. “If demand from the consumer sector and the business sector continue to grow, firms will step up their hiring plans,” said Wells. “Prospects are brighter than they have been for some time that faster job creation is achievable in 2004.”
GAFS sales increased 4.3 percent in 2003.
