A deep recession, severe winter weather and five fewer shopping days combined to create the most challenging sales environment in years for the nation’s retailers. According to the National Retail Federation, retail industry sales for December (which exclude automobiles, gas stations, and restaurants) declined 2.2% unadjusted over last year and decreased 1.4% seasonally adjusted from November.

November sales were revised down to a 3.4% decline unadjusted year-over-year from the original reported 2.2%.

As a result, initial 2008 holiday sales, which combine November and December sales, declined 2.8% to $447.5 billion, weaker than NRF’s projected 2.2% holiday forecast. Holiday sales in 2007 were $460.2 billion. This represents first decline in holiday sales since NRF started forecasting and tracking the numbers in 1995.

“The current economic crisis proved to be more challenging than any had anticipated,” said NRF chief economist Rosalind Wells. “Consumers showed they were more than willing to wait out retailers this year causing increased pressure on prices.”

December retail sales released by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 2.7% seasonally adjusted from last month and dropped 7.9% unadjusted year-over-year.  

There were very few seasonal bright spots in December. Among them were health and personal care stores, where unadjusted sales grew a solid 7.6% year-over-year and 0.4% seasonally adjusted from November. Sporting goods, hobby, book and music stores were up 0.7% unadjusted from a year ago and down 0.4% from seasonally adjusted month-to-month.

Weakness was seen by clothing and clothing accessories stores (down 9.4% seasonally adjusted year-over-year and 2.5% month-to-month seasonally unadjusted), furniture and home furnishings stores (down 11.9% seasonally adjusted year-over-year and 1.8% month-to-month seasonally unadjusted) and electronics and appliance stores (down 3.2% seasonally adjusted year-over-year and 1.0% month-to-month seasonally unadjusted).