The 2008 results, released at the group's annual convention in New York, mark the first decline since the NRF began tracking such figures in 1995.

In September, the trade group said it expected holiday sales, or retail industry sales in the months of November and December, to increase 2.2 per cent this year to US$470.4 billion (S$702.8 billion), which would have marked the weakest sales growth in six years.

On Wednesday, it said sales fell instead to US$447.5 billion.

The group had stuck by its forecast in late November, despite early signs of weak holiday spending that had many forecasters already predicting a decline in sales.

'There was a thought, an idea, that December last year was so weak and that Black Friday was so late (in 2008) that a lot of that shopping got shifted into December,' said NRF spokesman Scott Krugman. 'We thought there was a chance that it could jump back up, but obviously that didn't happen.

'I would imagine that we are certainly more humbled by what happened over the past couple of months, and I think it has made everyone that does forecasting take pause and realize just exactly what type of environment we are in,' he said.

The group is expected to provide its 2009 retail sales forecast on Jan 27. Chief executives speaking at the NRF convention from Wal-Mart Stores Inc and Macy's Inc said they expected a very tough year.

The NRF had developed its 2008 holiday sales forecast during one of the most chaotic weeks in Wall Street history, marked by the failure of Lehman Brothers, the government bailout of insurer American International Group Inc, and Merrill Lynch agreeing to be acquired by Bank of America Corp .

While it said at the time that it had taken into account the volatile situation, the financial crisis that struck the United States in mid-September spurred a wave of job cuts and investment losses that prompted consumers to pull back even more sharply on spending.

The year-end holiday season was also complicated by a calendar shift that resulted in fewer shopping days between Black Friday, the day after the U.S. Thanksgiving, and Christmas.

The NRF expected that would result in more shoppers heading to stores in the final days before Christmas, as they rushed to finish last-minute gift buying.

But many of those last-minute sales never materialised as severe winter storms sweeping across much of the country the weekend before Christmas kept consumers at home.

Mr Krugman said sales data released by the Commerce Department in December made it clear that it would be difficult to meet its forecast. But the NRF, while commenting on the difficult conditions, did not revise its forecast because it did not have a new, updated number to provide, he said. -- REUTERS