This morning’s retail sales highlights a strengthening trend in consumer spending. The commerce department’s retail sales rose 1.6% month over month. This was well ahead of expectations of 1.2%. As we suspected yesterday, the good news is driving equity prices higher across the board. The WSJ compiled a list of analyst reactions to the data. Worth browsing to gauge various opinions:
The consumer is back. Overall, this was a positive report signaling that consumers are increasing expenditures amid positive stock market wealth effects and the early gains in labor income. The pick-up in consumer spending is crucial for creating positive momentum in the economy and making it a sustained recovery. –Michelle Meyer, Barclays Capital
Every major category was up with the exception of gasoline (-0.4%) and electronics/appliances (-1.3%) — the latter was up a ton the prior two months, so a reversal is not a huge surprise. Among the highlights – general merchandise sales rose 0.6%, apparel rose 2.3%, home improvement up 3.1%, restaurants rose 0.3%, furniture +1.5%. –Jay Feldman, Credit Suisse
There were a number of surprises in the March results which tilted to the downside. In particular, the home electronics category posted a sharp drop on the heels of a couple of very strong months (the intro of the iPad may provide a boost for this category in April). Also, the general merchandise category was not nearly as strong in March as implied by the chain store results. On the other hand, apparel sales were quite a bit better than implied by company results. –David Greenlaw, Morgan Stanley
March results were certainly boosted by the effect of a very early Easter, and April will suffer accordingly, so the two months should be looked at as a package when the April figures are released next month. Still, there is no denying that consumer spending has perked up considerably in recent months. –Joshua Shapiro, MFR Inc.
Consumers spent freely in March. Toyota’s incentive blitz spurred vehicle sales, while much better weather, and an earlier Easter than in 2009, helped weather-sensitive items like clothing and building materials. But there is clearly an underlying pick-up in consumer spending that goes far beyond the weather. –Nigel Gault, IHS Global Insight
Overall recent retail sales reports indicate the U.S. consumer may have emerged from the financial crisis with fewer scars than we had feared. While we are not revising our medium-term consumption forecasts at this time, we would certainly acknowledge that the latest data point to upside risks. –Zach Pandl, Nomura Global Economics
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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