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Retailer's delight, but for how long?

Monday, April 14, 2014 - 02:27

April 14 - March retail sales in the U.S. saw their biggest monthly gain in a year and a half. But economists are divided on what the figures signify on the outlook ahead. Lily Jamali reports.

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As the snow melts, retail sales heat up. March saw a big boost in U.S. retail sales - the largest gain in a year and a half, according to the Commerce Department. The results confirmed what many analysts have been saying for months: that frigid temperatures in many parts of the country kept shoppers away from the cash register. Mike Niemira is the chief economist and director of research at the International Council of Shopping Centers: SOUNDBITE: MIKE NIEMIRA, CHIEF ECONOMIST, INTERNATIONAL COUNCIL OF SHOPPING CENTERS (ENGLISH) SAYING: "It's good news that the consumer is still buying and I think it says that the weather induced weakness from January that also lingered into February is starting to reverse and that the underlying demand remains relatively solid." The 1.1 percent increase in last month's retail sales was driven in part by the auto sector, also experiencing its largest surge in 18 months. But the positive results applied across the board: from clothing to restaurants to building materials... and February's sales number were revised higher. Niemira says the news help provide momentum for the broader economy to make up for a weak first quarter. SOUNDBITE: MIKE NIEMIRA, CHIEF ECONOMIST, INTERNATIONAL COUNCIL OF SHOPPING CENTERS (ENGLISH) SAYING: "With modest increases in the April to June period, you'll see a huge rebound in the arithmetic for the second quarter. That type of profile is what I would expect for GDP." But economist Robert Brusca isn't so sure. While the March bounce-back was bigger than he was expecting, he says there is still a lot of drag on this economy. SOUNDBITE: ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS (ENGLISH) SAYING: "Year-over-year job growth is about the same. We're not getting any kind of wage increase so you're not getting increases in wages to help personal income to rise. You're not putting more people to work. On the other hand, the stock market has fallen." After hitting record highs, the S&P 500 is now down one and a half percent so far this year. Consumer spending accounts for about two thirds of economic activity - so while pent-up demand might make March's numbers look especially strong, the fundamentals aren't as strong as Brusca would like. SOUNDBITE: ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS (ENGLISH) SAYING: "House prices are not going up the way they were and so the big wealth effects that were driving this economy - out of housing and stocks - housing is sputtering and the stock effect is gone - that's a big negative in terms of where you want to project consumer spending to go." That, coupled with stagnant employment and personal incomes, could mean the motivation to spend stays relatively low - even as temperatures move higher.

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Retailer's delight, but for how long?

Monday, April 14, 2014 - 02:27