Consumers will go shopping with an eye toward bargains in 1999 and spend less than in the past year, bringing retailers modest sales gains and possibly their weakest year since the early 1990s.
Buoyed by a strong job market, a booming stock market and lower interest rates, consumers kept the registers ringing in stores in Maryland and across the nation for much of the year, boosting sales by 5.1 percent over 1997, according to Commerce Department figures.
"1998 has been an extraordinary year for consumers," said Mark Zandi, chief economist for Regional Financial Associates, an economic consulting firm in West Chester, Pa. "Although retailers have had to be aggressive in their pricing, for the most part profit growth has been good and overall conditions have been strong."
But economists expect somewhat weaker conditions for the coming year, with slower job growth and a less meteoric rise on Walll Street.
"[This] year will be a much more difficult year for retailers, primarily because consumers will be less aggressive in their buying as job and income growth slows and consumers no longer benefit from further declines in interest rates and energy prices," Zandi said.
For much of the year, retailers have pulled consumers in with promotions.
Walter Loeb, president of Loeb Associates, a New York-based retail consulting firm, and other analysts and economists are forecasting sales gains in 1999 of just 3 percent, amid higher unemployment, more consumer uncertainty and more employment cutbacks.
"Employment has a significant impact on consumer confidence and therefore retail spending," said Bruce Van Kleeck, vice president of member services for the National Retail Federation. "We're still seeing low unemployment, but there's still signs out there indicating some problems, and that can cause overall consumer confidence to stumble a bit."
Rising personal debt won't help, Zandi said, adding that "lenders will be even more reluctant to allow consumers to borrow enough to support spending growth consistent with what consumers enjoyed for the year."
A 3 percent gain would be the slowest rate of retail growth since the early 1990s. Sales rose 4.3 percent in 1997, 5.2 percent in 1996 and 4.9 percent in 1995.
The National Retail Federation forecasts a somewhat brighter picture, calling for sales growth of 4.5 percent next year.
