Retail sales dropped 3% or more during the 2008 holiday period. Same-store sales at a number of large chains were down much more than that. The trend was so bad that thousand of store locations where closed early in 2009 and tens of thousand of people in the industry lost their jobs.

The 2010 holiday sales season may be nearly as bad as last year’s. The National Retail Federation expects a hard winter.

The NRF reports that it expects “holiday retail industry sales to decline one percent this year to $437.6 billion.”  The number falls significantly below the ten-year average of 3.39 percent holiday season growth.

The news may be bad for the entire industry, but it will be particularly troubling for retail chains that have already had difficult years. Abercrombie & Fitch (NYSE:ANF), American Apparel (NYSE:AAP),  Saks (NYSE:SKS) and Zumiez (NASDAQ:ZMUZ) are among the companies that need strong holidays to make up for extremely poor sales in the first three quarters of 2009.

The holiday season may be important to a number of retailers, but it is more important to the economy in general. Consumer spending still represents 70% of GDP by most estimates. The rise in unemployment and tight credit will likely keep retail activity down beyond the end of this year. That will cause more lay-offs in the industry and in turn push increased national joblessness.

Economists have to recalibrate their growth projections for the fourth quarter of this year and the first quarter of 2010. A jobless recovery is one thing. A “sales less” recovery is another.

Douglas A. McIntyre

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