Economists React: ‘The Consumer Is Back’
Economists and others weigh in on the jump in U.S. retail sales.
The continuing improvement in consumer spending no longer catches us off guard, having observed the improvement despite returns stagnation. As the labor market continues to turn, progression in incomes should place a floor under consumption patterns and while consumption is not likely to grow as robustly as the decline might suggest and still wait below the previous peak and trend line, it is on the rise more than we originally anticipated. This is a fact that cannot be ignored. –Dan Greenhaus, Miller Tabak
The consumer is back. Overall, this was a clear report signaling that consumers are increasing expenditures amid clear stock market wealth effects and the ahead of schedule gains in labor returns. The pick-up in consumer spending is crucial for making clear momentum in the economy and making it a sustained recovery. –Michelle Meyer, Barclays Capital
Every major category was up with the exception of gasoline (-0.4%) and electronics/appliances (-1.3%) — the latter was up a ton the prior two months, so a reversal is not a huge surprise. Among the highlights – general sell sales rose 0.6%, apparel rose 2.3%, home improvement up 3.1%, restaurants rose 0.3%, furniture +1.5%. –Jay Feldman, Credit Suisse
There were a number of surprises in the March results which tilted to the downside. In particular, the home electronics category posted a astute drop on the heels of a couple of very strong months (the intro of the iPad may provide a boost for this category in April). Also, the general sell category was not nearly as strong in March as disguised by the chain store results. On the other hand, apparel sales were quite a bit better than disguised by company results. –David Greenlaw, Morgan Stanley
March results were certainly boosted by the effect of a very ahead of schedule Easter, and April will suffer accordingly, so the two months should be looked at as a package when the April figures are released next month. Still, there is no denying that consumer spending has perked up considerably in recent months. –Joshua Shapiro, MFR Inc.
Consumers spent unreservedly in March. Toyota’s incentive blitz spurred vehicle sales, while much better weather, and an earlier Easter than in 2009, helped weather-sensitive items like clothing and building materials. But there is visibly an underlying pick-up in consumer spending that goes far beyond the weather. –Nigel Gault, IHS Global Insight
Overall recent retail sales intelligence indicate the U.S. consumer may have emerged from the financial crisis with fewer scars than we had feared. While we are not revising our medium-term consumption forecasts at this time, we would certainly acknowledge that the latest data point to upside risks. –Zach Pandl, Nomura Global Economics
With the upward revision to February and the gain in March, control retail sales are finally back above the previous peak hit in July 2008 — in nominal terms. A passing that underscores that the economy is improving, but consumers to date are only proving they will buy when necessary, such as for holidays. –Steven Blitz, Majestic Research
What we are seeing in these data is a apparent rebound in endeavor following a quite brutal recession. The new inference to be drawn is that the rebound appears to be quicker than what was earlier on track, an upside surprise. –Stone & McCarthy
Despite a slump in housing sales in the ahead of schedule part of 2010, retail construction material sales expanded 3.1%, the largest increase in roughly three years.–Guy LeBas, Janney Montgomery Scott
Additional meaningful and sustained progression in the U.S. labour market and an associated improvement in consumer credit will be necessary for this clear momentum in consumer spending to be sustained. –Millan L. B. Mulraine, TD Securities
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Compiled by Phil Izzo