As Consumers Cut Back, Retailers Brace for Trouble

Economists warn 2008 will be a discouraging year
By Jim O'Neill,  Newser User
Posted Jan 18, 2008 2:23 PM CST
A shopper leaves a Tiffany & Co. store in San Jose, Calif., in this Aug. 29, 2007 file photo. Retail sales are expected to rise at the slowest pace in six years as shoppers worry about a slumping housing...   (Associated Press)
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(Newser) – With consumer confidence skidding as the economy continues to spiral downward, retailers are reconsidering expansion, reducing staff, and trimming inventory, the Wall Street Journal reports. Analysts say 2008 could be the worst year for retail sales since 1991, and one economist warns that the early going “will feel like a recession to many people even if we technically avoid one.”

Final December retail figures haven’t been released, but the National Retail Federation projects a holiday sales increase of just 3% from 2006, below forecasts and the smallest increase since 2002. Analysts say retailers have created some of their own problems with rampant expansion leading to more competition, and the Internet drawing customers away from brick-and-mortar stores.