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By Jason Stipp | 04-14-2010 12:28 PM

Consumer Is Off the Mat

The strong March retail sales report continues a general--and sustainable--upward trend, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar. March retail sales report was released on Wednesday, and it surprised a lot of market watchers with a 1.6% increase. Is the consumer finally off the mat? Here with me to give his take is Morningstar's Bob Johnson. He is the associate director of economic analysis. Thanks for joining me, Bob.

Bob Johnson: Nice to be here.

Stipp: So, this report did look pretty good. It beat a lot of analysts' expectations; 1.6% seems like a good number. How good is it? How good is this report?

Johnson: I think it was a very good number. I think it was above expectations that were out there, and it's a very broad measure of consumer spending. It's one that I've had trouble forecasting, because so many things go into it. It's $4 trillion of our $14 trillion economy is reported on in this report--everything from gasoline sales, to restaurant sales, to things you buy in the store.

It's a pretty comprehensive number, and to see it up that big--that's 1.6% month-over-month. That's not annualized. If you look at the number year-over-year, what we did, we're up 7.6% with almost no inflation. Other years we've had maybe as much growth, but maybe with 4%-5% inflation; this time it's 1%-2%.

Stipp: Really, when you're looking at in perspective, it seems like a very good increase. So, I guess the second question for you, then. Is this a fluke? Is this a one-time thing? We saw some things in the past where maybe consumers were at home because of the weather. Is this just a brief bounce back for that?

Johnson: Well, I think this was a pretty stunning number. It was good. I think the April number will probably end up being relatively flat. There's a couple of special factors there. Easter slid one month versus the other. The weather was unusually warm right at the end of March, which really boosted clothing sales, for example. That certainly helped the numbers, but the general trend has been so positive, and I really did like this report.

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