Retail sales seen up 5 percent in 2004

Increased household income and low inflation should help drive a 5 percent rise in U.S. retail sales in 2004, the National Retail Federation trade group said on Monday.

"This year will see more balanced economic growth, with solid consumer spending and accelerated business investment," said Rosalind Wells, chief economist for the retail group.

The forecast refers to sales at general merchandise, apparel, furniture, electronics and other retail stores. In 2003, sales at those stores rose 4.3 percent from 2002.

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But sales were inconsistent last year, with luxury stores performing better than lower-priced chains. Analysts pointed to a strong stock market that benefited wealthier consumers more than lower-income families. Heavy job losses in the manufacturing sector also hurt spending at discount stores.

"As employment expands and wages and salaries firm, a broader spectrum of consumers will be in better financial shape, which should help lift sales more evenly across the board," Wells said.

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The trade group also noted that inflation is low and will likely remain modest through 2004. Interest rates are also expected to stay low, while the stock market and home values should increase, it said.

U.S. retailers had a blockbuster year in 1999, when a booming stock market and strong economy lifted spending. But the stock market collapse in 2000, and the Sept. 11, 2001, attacks on the United States curbed spending in the following years.

The last two years have seen lackluster sales as the U.S. economy struggled back from a brief recession.