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Retail sales forecast cut
September 20, 2001: 11:07 a.m. ET

Industry trade group halves estimate of 4Q gain, sees weak holiday
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NEW YORK (CNNfn) - The National Retail Federation trimmed its forecast of fourth-quarter sales gains in half Thursday and said it sees modest increases for holiday sales in light of last week's terrorist attacks on the World Trade Center and the Pentagon.

The NRF, which represents the nation's retail industry, said it now anticipates year-to-year sales growth of 2.2 percent for the fourth quarter instead of the 4 percent growth it previously forecast. The group also said it expects 2001 holiday sales to increase 2.5-3 percent.

"Since the terrorist attacks are so fresh and our country's response is not yet known, it is premature to make definitive judgments about the economy," Rosalind Wells, an NRF economist, said. "We can only speculate based upon what we think the administration will do and how consumers will respond."

Wall Street has been concerned that consumer spending, which fuels two-thirds of the U.S. economy and has been sluggish all year, might nosedive for a protracted period in the wake of the attack, helping bring on a full-fledged recession.

U.S. weekly chain store sales plummeted nearly 60 percent last Tuesday, the day of the attack, as many stores and malls closed and Americans stayed home to watch television news coverage of the tragedies, according to the latest sales report from Bank of Tokyo-Mitsubishi Ltd. and UBS Warburg.

However, spending levels had recovered by that weekend.

The NRF remains optimistic that spending levels will rebound with the holiday season and beyond.

"Recession remains a possibility. However, we feel that the strong underpinnings of the U.S. economy and the resilience of the U.S. consumer will force the stalling growth over the next few months to give way to a rebound beginning next year," Wells said. graphic