One reason for the smaller increase is due to a tough comparison to last year's figures. For example, GAFS sales were up 9.9% during 2004's first quarter, leading the NRF to predict that sales in this year's Q1 will only rise 3.7%.

Other factors will also decrease consumer spending. "This year, consumers will be under increased financial pressure due to higher energy costs and slow wage growth," says Rosalind Wells, the NRF's chief economist. Consumers will also have a lack of tax cuts and low interest rates that they've had in the past to help bolster sales, she says.

Discounters could be hit the hardest, because their customers could be the most affected by high energy costs and a lack of income growth. Home furnishings stores could suffer as the housing market suffers. The labor market will also play a large role in sales, the report says.