Market Talk

It looks better than a year ago, doesn't it?

It seems like people here in the U.S. became so used to the news being so bad, that absolutely anything that didn’t smack of Great Depression II was greeted as some harbinger of the days of wine and roses. That’s how most of 2009 went off.

Today’s retail sales report from January has some elements of this. Sales came in 0.5% higher than December, according to the Commerce Department, topping the Street’s 0.3% expectation. Sales were up 4.7% from last January (remember, last January was the depths of the recession.) But just because the numbers are positive, doesn’t mean they’re necessarily a positive.

“January’s retail sales figures show that spending is at least rising at a steady pace,” Capital Economics’ Paul Ashworth writes, “but there is nothing here to suggest the U.S. consumer is interested in becoming the engine of global growth again.”

Core sales have been rising since last summer, but are still well below the pace from the 2003-2006 boom years. And that isn’t going to change any time soon.

“We expect that lingering high unemployment, weak income growth, low confidence, tight credit conditions and the continuing need to deleverage will constrain consumption growth for at least this year and possibly well beyond,” Ashworth says. He add that without consumption growth, the recovery will likely falter in the second half, as the benefits of stimulus and inventory adjustments fade.