Retail sales poised to turn positive, but don't get too excited

Finally, retail sales figures are poised to turn positive.

But don't get too excited about forecasts that consumer spending, the biggest single component driving the U.S. economy, will edge back into the black for the Christmas holiday.

"The fourth quarter looks better than last year," said Frank Badillo, chief economist with industry think tank Retail Forward. "But we're still looking at the second-worst holiday season in 42 years."

What's happened is retail sales — and their key role in when the recession actually ends — are about to start being compared to last fall. That's when sales dropped off a cliff and stayed there after the financial markets meltdown.

So even forecasts of a zero to 1 percent sales gain issued for this holiday season by Retail Forward, Deloitte Research and the International Council of Shopping Centers are tinged by how low sales had fallen (to minus 4.5 percent) and the weakness of a jobless recovery.

Credit rising consumer confidence to the federal economic stimulus package, easing gas prices and shoppers just fed up with thinking about tough times.

"Consumers think things are getting better partly because they are spending money they actually have rather than taking on more debt," said Chris McCarty, who today will post another solid gain in the Florida Consumer Confidence Index at the University of Florida. "But I think they're starting to be more confident than is warranted."

Wild cards could snuff the optimism in the post-Cash for Clunkers world. The Federal Reserve could stop injecting cash to prop up the economy and raise interest rates. Slumping gas prices might be reversed. Without a fix for unemployment, uncertainty lingers.

Fragile signs of recovery are forecast to spread over the retail industry a bit at a time. While food and discount stores that sell essentials remain in positive territory, apparel and gift card sales are expected to edge up to flat during the holidays. So are sales by online retailers that a year ago were stunned with their first-ever sales decline. Jewelers are supposed to post positive numbers this time simply thanks to sales being compared with an 18 percent nosedive a year ago.

Because the housing industry remains unsettled, experts see no return of sales gains in home improvements, furnishings and furniture until mid to late 2010.

In Florida, the housing industry collapse triggered retail sales declines deep enough that the state is singled out by many retail executives in earnings calls. But sales are improving. Compared with being down 12 percent in December, taxable sales were down only 8 percent in July.

"The wealth lost in Florida housing was real, so the recovery here will lag behind the nation," said Sean Snaith, a University of Central Florida economist. "Plus recovery is slowed by weak tourism and no population growth."

He thinks discounting will remain crucial for retailers here.

Indeed, relentless discounting is not expected to ease in consumer electronics, where Retail Forward forecasts sales will be down 8 percent this fourth quarter compared with last year.

How serious can it be? Well, last month I thought I snagged a deal, paying $1,199 for an HD TV that listed for $1,399.

Five weeks later the same store sells the same TV for $1,050.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.