For Immediate Release

January 23, 2008

LANSING — Michigan retailers are cautious in their projections for 1st Quarter sales, following a disappointing holiday season, according to the Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.

Although the overall retail industry’s three-month outlook remains positive, the level of optimism is at its lowest point in seven years.

Holiday sales were disappointing for the majority of retailers, who went into the season expecting, on average, a 2.2-percent gain. However, only 34.5 percent increased sales, while 49.1 percent experienced declines and another 16.4 percent reported no change.

On a more positive note, nearly a fifth of the industry—19.7 percent—rang up holiday sales increases greater than 5 percent, while another 14.8 percent recorded gains of 0.1–5 percent.

“Retailers expected a tough season, and it was,” said James P. Hallan, MRA president and CEO. “Given the many economic challenges facing retailers, it’s remarkable that half of them did as well or better than the previous year.”

“As policymakers consider actions to stimulate the national and state economies, they must focus on plans to boost consumer spending and increase retail activity,” he added.

Sales for all of 2007 appeared slightly better than the holiday figures. The Index found 48.5 percent posted better sales than the previous year; 51.5 percent had lower sales.

For December, the Index showed 30 percent of retailers increased sales over the same month last year, while 54 percent recorded declines and 14 percent saw no change. The results create a seasonally adjusted performance index of 38.5, down from 48.1 in November.

In addition, 36 percent believe their sales will increase for January–March, while 36 percent forecast declines and 23 percent project no change. The results create a seasonally adjusted outlook index of 55.5, down from 56.0 in November.

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