Eventually, economic downturns make their way to the average spender. Consumer confidence falls as people save more and spend less in fear of even worse times to come. Reduced consumer spending hurts retailers, which hurts retail employees, who represent another big chunk of the economy. So an increase in retail sales is a good sign that the recovery is affecting all levels of the economy.
The good news: the National Retail Federation's 2011 economic forecast predicts a 4 percent increase in retail sales. Retail growth has enjoyed seven months of continual growth, and retailers had a pretty good 2010 holiday shopping season, so things are looking moderately optimistic on that front [source: Grannis].