Commerce Secretary Juanita Kreps yesterday told Washington business community leaders that continued high income here and relatively stable employment "will continue to bode well for local retail sales," which have been 12 per cent above the previous year's level during recent months.

In an address to The Washington Post's annual business outlook luncheon, Kreps also was optimistic about the overall national economy.

Although the patten of natiional retail sales may shift during the year, "with a possible leveling off in automobile sales until consumers are more familiar with the downsized models," a high rate of housing completions will boost sales of home during goods and "aggressive price competition" likely will stimulate electronic goods purchases, she forecast, reiterating views she expressed earlier this week.

The net effect of President Carter's forthcoming tax propsals, expected to include corporate and personal income tax cuts of some $25 billion, "should be to stimulate the economy and raise real incomes," the secretary asserted.

Locally, Kreps noted that, while Washington area population growth between 1970 and 1975 of 3.5 per cent was less than half the U.S. average, it still was twice as great as the average for large city areas.

"Washington area payroll employment has been more stable than the national trend, and employment losses during the last recession less severe than nationally," although local employment gains since the recovery have not matched the "fantastic national employment gains" of 4 million people during 1977, Kreps stated.

The Commerce Department's Economic Development Administration has approved $45 million in funding of local public works projects, and Kreps forecast that these programs will help stimulate Washington area employment - particulary in the District of Columbia, with an unemployment rate in excess of 7 per cent compared with about 4 per cent for the area as a whole.