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After reading through sales figures for April and first quarter earnings of retailers, I am questioning how good or bad the retail environment is. While Wall Street economists see a good economic turnaround in sight, there is still much to be cautious about. Saks Fifth Avenue is closing four stores in Portland, Oregon, San Diego and Charleston and instead will add four Off 5th stores.

Dollar Tree and Family Dollar are knocking the cover off the ball and adding new stores rapidly. While TJX and Ross Stores have shown moderation in April, they are predicting healthy growth for 2010. Their increases are coming from customers trading down from department stores. Recent unemployment claims increased.

What we have in the U.S. is a near 10 percent unemployment rate and about 7 to 8 percent of people under-employed. We have 80 percent or so of the population that is financially secure. But, they see friends, neighbors and family members who are not and facing challenging times.

As such, most retailers are moderating their second-half predictions, as they are uncertain how customers will be financially and emotionally for the holidays. Consumer sentiment has been affected badly by this recession. Sears will be buying gold and silver from customers, helping them to pay for current purchases. Walmart is rolling-back prices on grocery items, as its traffic declined in the first quarter as did comparable store sales.

When comparing sales against 2009 is also unhealthy. Last year was the worst retail sales decline since 1983, another bummer. The big thing is that retailers have cut stockkeeping units and inventories to increase productivity. Consumers responded, going elsewhere to shop for their favorite brands.

The problem we are facing is that the economy could very well roll-over into another recession or face stagnation for a lengthy period. A long, stagnant period will force department stores to reduce unproductive units. Presently, Nordstrom appears to be the one healthy chain in that distribution channel.

When JCPenney revealed a mediocre first quarter, it was the only department store to praise cosmetics, having added nearly 40 Sephora outlets. Mass makeup companies are also finding little traction in drug stores and have begun to expand distribution in dollar stores, where customers are increasing shopping. Security analysts have been warning for the past year that dollar store gains would dissipate once the economy picks up. That has not occurred.

Analysts also warned that TJX and Ross would lose apparel and houseware consumers once the economy returns to a healthier state. That has not occurred either. One could argue that these trends have not changes for either of two reasons. First, the economy has not revived as expected. Or, second the customer is still cautious and will not revert to her or his old ways.