June 13 - Retail sales rose more than economists had expected - a sign U.S. consumers are feeling more confident and spending despite higher taxes. Bobbi Rebell reports.
The old shop 'til you drop saying may not be back just yet, but U.S. consumers are at least venturing out to the stores. Retail sales rose 0.6 percent in May, better than forecasts, despite the fact that incomes have pretty much held steady. A lot of that was buying cars, gasoline and building materials - but even stripping out those categories, sales were up 0.3 percent. That matters because retail sales account for about 30 percent of consumer spending, and that, in turn, drives the US economy. Ken Goldstein is an economist at The Conference Board: SOUNDBITE: KEN GOLDSTEIN, ECONOMIST, THE CONFERENCE BOARD (ENGLISH) SAYING: "There is this steady build up in terms of the overall economy in terms of the consumer in terms of jobs not yet in terms of wages - that is still going to take more time but that combination of better economy better jobs a little bit better in terms of wages, improving confidence that is going to start to deliver a better consumer market." The data comes on the heels of underlying strength in the economy - jobless claims fell last week - and consumer confidence jumped recently. It could be the start of a virtuous economic cycle according to Goldstein: SOUNDBITE: KEN GOLDSTEIN, ECONOMIST, THE CONFERENCE BOARD (ENGLISH) SAYING: "Some of the headwinds we have been trying to drive against are turning into, and slowly going to turn into tailwinds, and give us a 2.5 to 3% GDP growth rate. The question is, can we get there as early as the third quarter? That's optimistic. 4th quarter this year- 1st quarter next year- easy." What will not be so easy he says - is keeping consumers spending if incomes don't start to go up.