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By Jason Stipp and Robert Johnson, CFA | 03-13-2013 12:00 PM

Consumers Keeping Up the Fight

February's retail sales report showed that despite the payroll tax and higher gas prices, the consumer appears to be resilient right now, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar. We got the government retail sales report for February this week. It showed a 1.1% month-to-month increase. A lot of that was driven by gasoline in this non-inflation-adjusted report. So, how good was that number? Digging below the surface is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: The month-to-month number looks very good. Normally, you look a bit longer term, but you told me this time there are some interesting things to talk about in the month-to-month data. What's your take on that 1.1% and some of the hints and trends you saw there.

Johnson: Sure, overall it's a good number. It was better than expectations, better than I was looking for, and certainly indicates that maybe the payroll tax hasn't killed the consumer just yet. We were all very fearful. Especially, there were rumors early in the month about some disaster sales reports out of Wal-Mart, which is particularly affected by all the negative trends that are out there. So it was a great deal of relief to see this number.

Digging down a little bit, obviously, on the month-to-month numbers, the big driver was gasoline sales, which were up a lot, but that's up mainly not because people were buying more gasoline. It was just because prices were up. Building materials was another strong category. It was kind of out of the reach of conventional retail but also did well with the housing situation dramatically improving and probably the weather forcing people into the stores a little bit differently than they did in the past.

Stipp: So, some of the short-term concerns here were that payroll tax holiday expired so people kept less of their money out of their paychecks, and then also, as you said, gas was a big component here. People were spending more on gas because gas prices are higher. If you take both of those out, month-to-month like in the short-term, how are other retailers doing? Are they struggling because of the higher gas and higher tax?

Johnson: You know what it depends on where you are. Some of the people like the nonstore retailers, the online companies--primarily let's use Amazon.com as the factor there--there when you got gasoline prices up, it actually might benefit some a little bit because people are less prone to go drive or think, "I'll just punch into Amazon, and I'm done. I don't have to go driving for it."

So, certainly the gasoline in the short term helps some of that. We saw both year over year and month to month some great numbers out of the Amazon-like outlets. We were up both year on year over 15%. In fact now some of the nonstore retailers are getting to be huge. I mean they were 8.5% of retail a year ago. In one year that moved to 9.5%, so some pretty dramatic improvement there.

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