Despite all the concern over rising gas prices and the payroll tax hike, February retails sales show Americans spent at the fastest pace in five months.
Retail sales rose 1.1 percent in February from January, beating expectations for a 0.5% increase. That said, about half of the jump reflected higher gas prices.
Sales at gas stations surged 5 percent, according to the Commerce Department, making it the biggest advance since a 6% rise in August.
“All gasoline,” is the way Kristin Bentz, president of retail/consumer advisory Talented Blonde LLC, puts the report.
“It’s better,” she tells The Daily Ticker. “But if you look at eating out, dining, department stores, the consumer is pulling back - the evidence is there. It’s nice to see a positive number, we just need to sustain that.”
Bentz, who is also executive director of the private equity firm PMG Venture Group, admits she did expect the February results to be a little worse given the consumer headwinds. However, she says she thinks we will see that pullback with the effects of the sequestration start to trickle in.
“It’s definitely coming,” she says, adding to the bigger picture trend she sees. “We’ve seen the middle class essentially vanishing before our very eyes. And you have this bifurcated market at retail, so the super high-end is doing well while dollar stores are thriving. Anyone else in the middle, you’re kind of cross-cut.”
Bentz argues the consumer is trading down from already low-end mass retailers like Wal-Mart (WMT) and Target (TGT), shopping even for food at dollar stores like Dollar Tree (DLTR) and Dollar General (DG).
While a 1.1% increase in building material sales could stand benefit retailers like Home Depot (HD) and Lowe’s (L), Bentz isn’t enthused about a housing-recovery-fueled middle class recovery. She says it’s going to take awhile for improvement in housing to “become a boom.”
Bentz says the number one factor that would need to change to see a shift in the bifurcation of the retail sector would be a sustained improvement in jobs.
She also says mass retailer (COST) is the big box benefiting from strength in higher-end consumer. (Note: She has no position in these companies.)
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