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Consumers Sitting On The Sidelines? Maybe Not.

By John S. McClenahen Manufacturers looking for a little good news about consumer spending were disappointed on May 14. The U.S. Commerce Department reported that retail sales during April totaled $309.5 billion, down 0.1% from March. Subtract auto purchases, and sales were down 0.9%. "Someone forgot to tell the U.S. consumer that the war is over," quips David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York. However, "the nominal figures overstate weakness," asserts Maury Harris, chief U.S. economist at UBS Warburg, New York. "The extreme volatility in retail sales over the last few months, part of which we believe could reflect seasonal adjustment problems relating to Easter timing, cautions against taking the April data too literally." Had there not been a 5.9% drop in gasoline prices, retail sales would have risen 0.4%, he figures. Nevertheless, as a beginning to the second calendar quarter of 2003, the consumption numbers were a disappointment, Harris acknowledges.

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