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By Jason Stipp | 09-15-2010 02:14 PM

Chance of Double Dip Fading

Recent trade balance and retail sales data point to growth of around 2%-2.5% in the second half of the year, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar. With a lot of market watchers still very jittery about the state of the economic recovery, we've had a few positive reports recently, and the question has to be raised: Is the possibility of a double-dip recession now fading.

Here with me to talk about his take on that and what some recent reports might mean for GDP in the back half of the year is Morningstar's Bob Johnson, Director of the Economic Analysis. Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So we have some recent more positive reports after what seemed like a serious string of negative reports for a while. An important one that came out this week was retail sales. Tell us a little bit about what you saw there and why you thought it was a good report?

Johnson: Yes. The retail sales number was a very good report this morning. If you'd strip out the autos and gasoline, the two more volatile numbers in the series, we were up five tenths of a percent and that has been our best number since March. And remember, that's a month-over-month, so that annualizes into something like 6%. So that was great number.

Stipp: We also heard from some individual retailers this week. There maybe were some interesting findings in their reports. What did you see on that front?

Johnson: Yeah. I think there were two and one was Best Buy, which I think really is a microcosm of lot of what's going on. Their sales were probably just a little disappointing and earnings were exceptionally good, and the reason is I think some of the lower-margin things maybe TVs and so forth and computers, low-end computers, were a lesser part of the mix, and you get Internet services, some of the cable things they sell with stuff, and the mobile devices, which tend to have higher margins, all drove the numbers, and so that caused the improvement.

And the other thing that was there is that U.S. sales were relatively flat, and they did better overseas. So it's kind of that phenomenon where the U.S. is kind of holding its own and the better growth is coming overseas. So those were the key takeaways from that.

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