War with Iraq has prompted the National Retail Federation (NRF) to revise its 2003 forecast for GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores). According to its forthcoming Retail Sales Outlook Report, NRF has revised the 2003 forecast from 5.6 percent growth in 2003 to 3.8 percent growth.

NRF Chief Economist Rosalind Wells stated in January that any geopolitical uncertainty—including a war with Iraq—would affect current retail projections. "The Iraqi conflict is hindering decisions made by both businesses and consumers," Wells said in a prepared statement. "Not only are businesses taking a wait-and-see approach before making major financial commitments, they are reluctant to conduct business as usual, holding back hiring and causing layoffs of others."

In addition, consumers have been affected by the escalating price of crude oil. "Consumers have had to dig deeper into their pocketbooks to pay for home heating bills and run their cars," Wells said. "As a result, disposable income has decreased and retail sales have suffered."

However, Wells said, consumer spending should significantly improve once the Iraq conflict is resolved, likely by the second half of the year. "Assuming a positive war outcome, consumer confidence should increase. Employment and income gains will increase. Oil prices will subside. The stock market will probably reflect better times ahead. And a return to more robust consumer spending should follow," Wells said. "Once again, all eyes are on the consumer to lead the economy to higher ground."

NRF projects first quarter GAFS sales to increase slightly more than 2.0 percent. Second quarter sales are forecast to increase 2.5 percent, third quarter sales are projected at a 4.7 percent increase and fourth quarter sales are estimated to increase 5.3 percent.