Last week, the National Retail Federation (NRF) put out its 2011 economic forecast, predicting that retail sales will increase 4% over 2010. This projection seems to fall in line with other economic indicators: Consumer confidence is up, home prices are starting to stabilize in many markets and unemployment is shrinking, albeit slowly.

It also mirrors recent research from the National Foundation for Credit Counseling that found we're getting a little tired of pinching pennies.

All in all, a boost in retail sales is good news, of course. But what, exactly, does it mean for your wallet -- and what are you going to see over the course of the year?

Here's how Jack Kleinhenz, NRF's chief economist, thinks it will all shake out:

More Optimism
We know this from the most recent consumer confidence survey, and NRF's forecast confirms it. Over the past few years, consumers have really been keeping their wallets closed, and that's slowly starting to change, which will help prop up the economy. "A number of issues have curtailed spending by consumers during this recovery, when in the past, during other recovery cycles, consumers have tended to start spending much earlier in the process. That hasn't happened until recently, but now consumer sales are bouncing back, and there is a good indication that there is more confidence in the economy. The outlook is more favorable overall," explains Kleinhenz.

A New Hitch
Gas prices are on their way up, and that always cuts into discretionary spending. Last month, we saw Social Security tax cuts -- the withholding was reduced from 6.2% to 4.2% -- that put some extra money in our paychecks every month. Unfortunately, the impact of that extra cash might be absorbed by these higher gas prices, says Kleinhenz, which has the potential to hurt retail sales. In the past, consumers may have adjusted better to higher gas prices, but these days, we're wary. "Historically, when we had higher gas and energy prices occur, people said they'd spend more on gas but they weren't going to cut back on other things. Today, consumers are much more prudent given the way the economy has preformed." Being more careful is good for your wallet, but not necessarily for the economy.

Higher Prices
Kleinhenz expects that retailers will continue to attempt to spark sales with value pricing, but there's another wrench in the progress: Cotton prices are up due to poor weather and increased demand. That could translate into higher prices for retailers (you may have already noticed prices inching up at the mall). "Not everything will increase in price, because there could be substitution of wool or synthetics. But there could be price acceleration in certain clothes that have a higher cotton content, and you see more of those in the spring and summer," explains Kleinhenz. Baby clothes, in particular, may be hit.

Investment Opportunities
When consumers have more discretionary income, retailers tend to do better. So, Kleinhenz says there could be an argument for investing in retailers that have the ability to capitalize on that, and show it in their quarterly or annual sales performance. But, as always, you have to look at your portfolio as a whole. You always need to be mindful of your long-term goals, and the best portfolios focus on diversification, not chasing the next hot stock.

Kleinhenz notes that the data from the NRF isn't all-inclusive. "When we compute our retail sales number, we actually exclude some numbers in the data, because some things just aren't as consumable on a regular basis. So, we exclude automobiles, gas stations and restaurants. When we look at retail sales, we're looking at the core activities that are traditional retail." The projections are based on stores you'd find in a mall, plus independent retailers, grocery stores and discount outlets.

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May 29 2011 at 1:06 AM Report abuse rate up rate down Reply

the stocks i mentioned in my last post have all whent up over the past 4 years, and also the commoditys, the Cambels soups did very well, so did Ford and silver in all forms, dollor stores and trees have had a steady recession proof return, and many of the other stocks and commoditys i bought have a steady return also, i did really well for a small investor in the past 4 years, made some good money. I can,t buy whole rail roads like the Buffet, or the rest but i have made a good buck thinking outside the box. Years ago i was one of those so called nuts that bought Yahoo, and Ebay Auctions for pennys when they first started and no one thought they would become so huge, i bought a few other teck stocks back then also, the Ebay i made a million bucks, yahoo 3/4 million bucks wasn,t bad for a 8 to 5 working my job and a limited investor with limited funds back then. Think outside the box and stady and easy winns the race.

February 28 2011 at 10:55 AM Report abuse -1 rate up rate down Reply

when this recession was about to unfold few years ago i bought a lot of out of the box stocks, and commoditys. I bought soup companys, silver in all forms, some gold, pladdium coins ( made $500.00 profit on each coin ) I took a leap of faith when NO one wanted Ford stock and made a bundle, it sold it and bought a lot of raw silver when the price was low, and bought some commoditys, thinking out of the box i bought Dollor Store company stocks, Dollor Tree also, you know every thing for a buck stores you see all over the place, and yes they do have stock and it did really well and i still hold it, how can you bet a buck for stuff in a recession, you can,t. Stay away from Gas stocks, and the norm that people have been buying for last 20 years. Think out of the box how people will react in a unemployment recession, and also buy some stocks that pay some dividends, but not to many and don,t invest in just dividend stocks, it will come back to bite in the end, and check out companys that make items that are used and tossed away so have to rebuy, like Proctor Gamble items, Pampers,diapers,tissue,close washing stuff, companys like PG are ok but be care ful, it has moood swings. Good luck with your investing .. silver will reach 65 to 75 bucks a oz. at the end of 2012.

February 28 2011 at 10:36 AM Report abuse -1 rate up rate down Reply

The metals are still good for the small guy but all companys are raising there prices because the 5-7 buck jump on silver in the past 2 months and its steady increase of 50 cents a day, slow and easy winns the race these days. Stay away from all those 3% investment things they are a joke. For most $10,000.00 buck investment for a year you only end up with some where around $150.00 profit for them holding your 10 grand for a year, thats a joke. If you took that same 10 grand and bought raw silver coins, the way silver will raise in one year you would make at the least 40% on your investment, nickle is a good investment also, its used as a base metal for many industrial things. Some silver mine stocks will be doing good soon as silver gets low in stock piles,and they are drilling to find new viens, its not a bubble. The rich investor DOES NOT FOLLOW the other investors, they find investments that pay them the best return. In times like this you have to think out of the box some times to make money. Example: if i find some thing and invest 20 bucks and that has a slow and steady return upward of even 5% to 10% a week and month ill keep that baby going and invest more, its like putting quarters in a jar, little at a time adds up to dollors before you know it.

February 28 2011 at 10:17 AM Report abuse rate up rate down Reply

Don,t trust the data .. it can be changed at will, just like companys can change they are doing to look good to sucker investors. Big companys do it all the time. The rich and powerful are NOT in the habit of giving anything away, just like banks, they give nothing to anyone, look at the interest rates its pitterful. I can take a company and move money around inside it and make it look like its doing well when the company im moving around is making nothing. Don,t invest and get a couple cents on the dollor, if your a small investor, it does not pan out in the end. Only the big investors that buy millions of stocks make some money, because they buy in large bulk and they control the company. Some of the commoditys are a good investment, some of the metals, grains, coffie, stuff like that. I posted that silver will reach 50 bucks a oz at tax time in 2011 9 months ago, silver is raiseing at a slow but good pace, up 5 bucks a oz. on spot silver/ 7 -8 bucks on most silver coins like Silver Egals..this will continue the next 3 months untile it hits around 50 bucks a oz. coffie, corn for fuel, and others will pay a good payout also, with gas prices headed OVER 5 bucks a gal. most SUMMER places will get hit hard, a lot of people will not shop as much, and the USA ecconomy can slip very easy back a few points and loose all its gained.

February 28 2011 at 10:00 AM Report abuse rate up rate down Reply

It won't mean that much for me. I have no retail investments and my retail history consists of waiting for a sale and then wearing last seasons items next year. I can only imagine what it is like to buy a new dress and shoes and wear then IN SEASON!

February 28 2011 at 9:48 AM Report abuse +1 rate up rate down Reply
1 reply to Angela's comment

I don't know where all this recovery talk is coming from. Half of the people I know are unemployed and have lost their homes. Retail shopping??? Who are these people this article talks about. If it doesn't come from Walmart, Target, or Ross type stores & on sale 75% off I don't bother. Now with higher gas...that all will end also. Retail shopping used to be my favorite past a fond & faraway memory.

February 28 2011 at 2:35 PM Report abuse rate up rate down Reply

The little guy must submit to the pump. Its a struggle

February 28 2011 at 9:36 AM Report abuse +1 rate up rate down Reply


February 28 2011 at 8:35 AM Report abuse rate up rate down Reply

Retail rebound? Where? China? It certianly isn't here. Between the corruption in our goverment and the press, the average American is being lied to, shafted, and abused. Americans are barely able to cover the rent, oil bills and food without buying "toys."

If "recovery" means cutting wages down to a fraction of what they were a year ago, not recving basic job benefits, no job security, the continuation of job outsourcing, supporting 18 million illgal aliens with our Social Security benefits and welfare money, and watching our goverment grant "loans" to foreign countries then someone needs a dictionary.

We're allowing this go on instad of raising the price of wheat to equal the price of a barrel of oil: Fining companies who outsource American jobs instead of rewarding them with tax rebates: getting rid of illegals who drain our blood. The excuses made that they can't find them is garbage: they found them long enough to sign them up on our welfare benefits and in some states issuing them valid drivers licenses!

February 27 2011 at 12:43 PM Report abuse +1 rate up rate down Reply

Our socialist public educational system has indoctrinated our children into believing capitalism and freedom is bad and socialism is good. If Socialism is so good, why does the long time socialist government of Mexico boast of being the #1 producer of silver, plenty of oil, and the richest man in the world, yet 99% of their people are in the poverty level making an average of less than 6 dollars a day. Corruption is rampant. The evil, ultra rich see Mexico and want to implement socialism here, where they can have all of the wealth and power and the middle class will now be among the poor. That is what their Demoncrat puppets in the white house and senate are doing to us.

February 27 2011 at 6:47 AM Report abuse rate up rate down Reply