For Immediate Release

May 23, 2007

LANSING —Michigan retailers are cooling their early summer sales projections.

Fewer than two in five now expect to increase sales during the next 90 days, a decline in optimism from recent months, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

The scaled-back forecasts follow a drop in sales during April.

“I believe the rapid rise in gasoline prices is having a negative effect on sales,” said one retailer who responded to the confidential survey of MRA members.

“If it's this high now, I'm concerned about the public's planning for the summer months. Couple that with the state of the economy and I'm very concerned about retail sales for the next few months.”

Larry Meyer, MRA chairman and CEO, said higher gasoline prices and Michigan’s higher unemployment rate in April contributed to the drop in overall retail industry performance. He said retailers are telling him that the sharp rise in gasoline prices is cutting into their May sales as well.

The Michigan Retail Index showed that 35 percent of retailers increased sales in April over the same month last year, while 47 percent recorded declines and 13 percent saw no change. The results create a seasonally adjusted performance index of 39.7, down from 49.0, in March.

In addition, 38 percent believe their sales will increase for May-July, while 27 percent forecast declines and 29 percent project no change. The results create a seasonally adjusted outlook index of 49.8, down sharply from 57.1 in March.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation’s largest state trade association of general merchandise retailers.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.