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By Jason Stipp and Robert Johnson, CFA | 04-18-2012 01:00 PM

Read Past the Quirks in Consumer Spending Reports

Morningstar's Bob Johnson explains why the various consumer spending reports show different levels of growth--and what each one is really indicating today.

Jason Stipp: I'm Jason Stipp for Morningstar.

We've said time and again that the consumer is the most important thing to watch at this point in the recovery.

Morningstar's Bob Johnson, our director of economic analysis, looks to three separate reports to get a handle on the consumer. Each one has its quirks. He's here to tell us a little bit about them, and what he's looking for in each. Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So, there are three reports that you look at. There's one that you have often mentioned in videos that we've done. It's one of your favorite reports, actually. It's the weekly report on consumers. Let's start there--what that report is and what some of its quirks are.

Johnson: It's from the International Council of Shopping Centers, and it's a report that's gathered from asking a relatively small number of companies--most of them in malls obviously--what their weekly sales were, and they use that data to extrapolate what the rest of their universe did. But we do get the report every week.

Stipp: And these are so-called same-store sales. So they are looking at stores that have already been opened for a while and how they did during that reporting period. How does that affect the numbers?

Johnson: Obviously, as they open and close stores, the total sales from all stores will be different from the same-store sales report, but the retail industry is very much looking at same-store sales. If you open more stores, that really doesn't count as being something that's really good for a business. It just means you opened more stores. So, people like to look at the metric of same-store sales. That's how the International Council of Shopping Centers reports it. But [the total retail sales] number is really higher than that, ... because [companies] open new stores.

Stipp: And when you are looking at that number, given those factors, what has it tended to be? So it would be lower than obviously a full retail sales growth number. What's the trend there?

Johnson: This number is not inflation-adjusted, and it runs about 2.5% to 4% [growth] is what it has run in this recovery. Now, ... in a recession you may get down a couple percent on this metric, and in a really boom time, you might get near 6%, but that's kind of the realm of possibilities.

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