NRF: U.S. retail sales to rise 2.5% for 2010

New York City The National Retail Federation reported Tuesday it has forecast that U.S. retail industry sales should rise 2.5 % this year.

The announcement is an indication that retail has survived the worst of the downturn and can expect that the improvements in the housing and job markets will bolster shoppers' confidence, according to the NRF.

The 2010 forecast is an expected improvement from a 2.5% drop in 2009 and a 1.3% increase in 2008. The data covers retail industry sales, excluding automobiles, gas stations and restaurants.

This year's sales forecast, while calling for growth, is still a modest one. Excluding the past two years of recession, a 2.5% rise in retail industry sales would mark the lowest year-over-year increase since 1995, when the trade group began tracking such figures.

"I wouldn't describe this as a very strong year," said NRF Chief Economist Rosalind Wells. "We're not going to have a V-shaped recovery in the economy, and we won't have a V-shaped recovery in consumer spending or retail sales. It's a slow return to a more normal level."

U.S. retailers just completed a better-than-expected holiday sales season. Holiday retail sales rose 1.1% in 2009, according to the NRF, beating its own forecast for a 1.0% drop in sales for the November-December period.

Retail chains were able to improve upon a dismal 2008, when holiday sales fell 3.4%, by cutting inventories and offering more targeted discounts to attract frugal shoppers.

For 2010, Wells said she expects consumers to keep a frugal mind-set with a focus on values, which should boost discount retailers, warehouse clubs and off-priced retailers.