By John S. McClenahen As David Rosenberg, chief North American economist at Merrill Lynch & Co., New York, puts it, in retail sales there were "no slides of March." To just about everyone's surprise, retail sales in March increased an impressive 2.1% ...
ByJohn S. McClenahen As David Rosenberg, chief North American economist at Merrill Lynch & Co., New York, puts it, in retail sales there were "no slides of March." To just about everyone's surprise, retail sales in March increased an impressive 2.1% to $311.5 billion, the best showing since October 2001, the latest U.S. Commerce Department data show. "Retail sales accomplished what most of the [other] economic indicators haven't been able to do with any regularity in the past two months and that's beat -- smash, that is -- consensus expectations," stresses Rosenberg. That's significant, because consumer spending accounts for about two-thirds of U.S. GDP. At the same time consumers were spending more, however, prices at the production level also were rising. The U.S. Labor Department's producer price index (PPI) for finished goods, a key measure of inflation, rose 1.5% in March, compared with just 1% in February. The so-called core PPI, which does not include the often-volatile changes in prices for food and energy, rose 0.7% in March. Neither is great news. However, Maury Harris, chief U.S. economist at UBS Warburg LLC, New York, attributes the higher-than-expected numbers to "a quirky surge in car and truck prices." Asserts Harris, "Inflation has not yet rebounded at the finished-goods level."
