Every since "Black Friday" sales surprised to the upside, Barry Ritholtz and Jeff Macke have been engaged in a running debate on the state of the U.S. consumers, as seen here:
Following the recent reports of strong same-store sales date and robust auto sales in February, we decided to revive this retail rivalry.
Ever combative, Ritholtz is not backing down from his long-running view that U.S. consumers remain down, but not out.
"I'm pretty confident the calls we've been making on retail have been dead right," he says. "The consumer doesn't have access to credit. They don't have a lot of pent up demand and they are in the process of deleveraging."
Asked about the seemingly stellar February same-store sales data, Ritholtz credits the unseasonably warm weather in much of the country. "People are not home shoveling their walks, they're doing a little bit of shopping," he says. "You're pulling sales forward."(See: Retail Shares Surge, Davidowitz Scoffs: "80% of America Is In Recession or Depression")
As for the February auto sales data, up 16% from a year ago to 15.1 million annual sales rate, the highest since early 2008, Ritholtz is similarly unimpressed. "After a couple of terrible years [consumers are] replacing older cars which are overdue to be replaced," he quips. (See: Why the Electric Car Is Doomed to Fail)
As you'll see in the accompanying video, Macke and I disagree with this view and are a bit surprised Ritholtz would seemingly dismiss or downplay these recent signs of life in consumer spending. (How do you think he'd react if retailers cited unseasonably cold weather for poor sales?)
U.S. consumers are still suffering from high unemployment, the bursting of the credit/housing bubble and the rising cost of basic necessities. Still, it's hard to deny the tone of the data has been much better than feared, a point Macke has made repeatedly. (See: Retailers Post Strong Sales in February: Can the Trend Continue?)
For example, rising gasoline prices have not stifled consumer spending -- at least not yet and at least not judging by the most recent data points. All in all, U.S. consumers are holding up much better than expected, whether the bears admit it or not.
- Jeff Macke