For the full year, retail sales dropped 6.2%, more than ten times the drop of 5% in 2008, which was the only other year on record to show a decline.
Some specialty retailers like Macy’s (M) and Nordstrom (JWN) did well in December. Over the full year, Macy’s shares are up more than 70%. Nordstrom shares are up a whopping 200%.

The news, of course, is not good for everyone. Abercrombie & Fitch (ANF) shares took a beating earlier this week when an analyst lowered EPS expectations from $0.97 per share to $0.81 per share. Average full-year EPS is expected to come in at $0.95, which indicates that ANF is getting back on track, but more slowly than expected.

Overall, specialty retail market sales fell 0.6% in December, and the fear is that sales will not bounce back in the coming months. Surely there is no good reason for sales to rebound given 10% unemployment, stagnant wages and lower levels of consumer credit.

It bears repeating that about 70% of U.S. gross domestic product is based on consumer purchases. If consumers don’t buy, the whole supply chain suffers. The Obama administration has tried to replace consumer dollars with federal dollars through the nearly $800 billion stimulus package.

Unfortunately, the federal government has no need of shoes, pants, refrigerators or stoves, and so stimulating these purchases is at best indirect. However, unless the economy can get going again on its own, stimulus dollars simply won’t do much more than delay the inevitable.

Macy’s, Nordstrom, and Abercrombie & Fitch depend on consumer spending, and there is no evidence that tight-fisted consumers are going to change their newly-frugal habits anytime soon. Macy’s and Nordstrom have improved their sales in the last two months, but revenue growth was negative at Macy’s in the third quarter and up less than 5% at Nordstrom. Abercrombie & Fitch revenue for its third quarter was down 14.6% from the same period a year ago.

Retailers generally experienced a better December 2009 than many observers expected. And that’s good because the other 11 months were a near disaster. Retailers suffered through most of 2009 and only a cockeyed optimist expects them to recover fully in 2010.

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