Chain-Store Sales Results Misleading

Posted by Patrick O'Connor on 5/8/08 10:59 am

Many financial news sources are cheer-leading the April chain-store sales results today, which were up a bigger-than-expected 3.6%. But when you scrape off the headline fluff, one can easily see that the overall result was tainted by higher gasoline prices, an extra shopping day from this year’s early Easter, and significantly warmer weather compared to April 2007, which was jolted by a record cold snap. Moreover, consumers flocked to the discounters last month, so the gains were not well distributed. Watch Video

Nonetheless, the good news is these data support the notion that consumers, who represent about 70% of economic growth, held up better in April than many expected. Still, with gasoline prices hitting another fresh all-time high today we have to wonder where the tipping point is, especially with the summer driving season still to come. That point will be difficult to gauge, though, with the artificially buoyant tax-rebate checks arriving. But that’s no accident. The big bet is the economy will begin to rebound about when the last of these checks has been spent (if they’re spent).

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