Retail Sales Defy Recession Talk

Tuesday, May 13, 2008

Retail Sales Defy Recession Talk

April retail sales were down 0.2%, in line with the market's estimate. Excluding autos, retail sales rose 0.5%, which was better than the expected 0.2% increase. Strikingly, gas station sales declined 0.4% in April. If you exclude gasoline and autos, retail sales were up 0.6%, which suggests there is still a decent underlying trend in consumer spending despite the macro headwinds. In brief, the consumer is alive and kicking despite all of the alarmist reports about his/her death due to rising food and energy costs. This is an encouraging report that defies the talk about the economy being in recession. The added benefit is that the underlying strength is evident before the full brunt of the fiscal stimulus has kicked in.