Rising Retail Sales...So More Summer Shoppers?

The U.S. Department of Commerce reported today that retail sales are up for the tenth straight month. Sales in April rose half a percent. Host Michel Martin and NPR's Senior Business Editor Marilyn Geewax discuss what these retail sales figures mean for the economy this summer and for the country's long term fiscal health.

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MICHEL MARTIN, host: I'm Michel Martin and this is TELL ME MORE from NPR News.

Coming up, the Cannes Film Festival is under way and stars like Johnny Depp, Angelina Jolie and Penelope Cruz are gracing red carpets around the French Riviera. Oh, and they're playing some movies too. We'll talk to Toronto Sun film critic Bruce Kirkland about the festival's most anticipated and controversial films.

But, first, April put a spring in the step of American retailers. According to the latest figures from the U.S. Commerce Department, retail sales rose for the 10th straight month in April, climbing by five-10ths of a percent. But is this a glass half empty or half full story with high gas prices putting a damper on the overall good news? We sent out an invitation to our listeners on Facebook to find out what they had to say. Here's what Conor Geary from East Hartford, Connecticut had to tell us.

CONOR GEARY: I'm considering potentially leaving my stable job in higher education for a job in the restaurant industry, in part due to my current distance from home and the corresponding cost of travel as it relates to the increase in gas prices.

MARTIN: We also had this comment from Jessica Stahl from Greensboro, North Carolina. She wrote: My husband, son and I had to ditch our plans for a two-week road trip from Greensboro, North Carolina to Boise. We planned, saved money, the whole thing, but stupidly we didn't expect gas prices to inflate so sharply or quickly. We weren't even going to stay in hotels - just car camp along the way.

We wanted to talk more about all this, so we've called NPR senior business editor Marilyn Geewax. She's here with us in our Washington, D.C. studio. Welcome back, thanks for joining us once again.

MARILYN GEEWAX: You're welcome.

MARTIN: Put this overall figure into context for us. This 10 straight months of increase in retail sales. So that's good news. But what about the figure itself that five-tenths of a percent increase...

GEEWAX: Five-tenths of a percent.

MARTIN: Is that good? Are we happy about that?

GEEWAX: Well, it's not terrific, but it's OK. It's a 10-month trend and that is a good trend line. And, really, what we're seeing here is rising confidence among consumers, because they feel more confident about their jobs. When people fear that they're going to lose their job, they don't want to spend money. But in the recent months we've seen jobs being created.

Last month we had 244,000 jobs created. That sort of puts a little more spring in your step. On the other hand, people are worried about groceries and gasoline. They're both up. And we're kind of at an interesting point, right now, where on the one hand people are dying to spend more money. On the other hand, they don't have as much money to spend because they're putting it into their gas tanks.

MARTIN: That was going to be my question. Is the spending coming from money that people have or are they adding to their debt?

GEEWAX: Well, we've seen a real wage squeeze in the past year. People really have not been getting raises. So even though they are working pretty steadily and jobs are increasing, you're not really getting the kind of increase in salaries that would let you go wild and spend. So there's restraint out there and people aren't so much adding debt, they're just kind of, you know, moving along in the right direction. But here's what - when you dig into the numbers a little bit, what it shows is people are replacing things they need. There's pent-up demand. They need clothes. They need shoes. They need things, you know, around the house.

But we're seeing a little bit of a dip in things like restaurant spending. So it suggests people are pulling back because they're not getting the big raises. But they do need to spend because they've been holding back for two, three years now.

MARTIN: If you're just joining us, you're listening to TELL ME MORE from NPR News.

We're speaking about the new retail sales figures for April that just came out today with NPR's senior business editor Marilyn Geewax. Talk a little bit more, if you would, about the price of gasoline. It passed four dollars a gallon in more than a dozen states. And - so how does that affect those numbers?

GEEWAX: Well, it's just a really psychological damper because gasoline prices are just so obvious. You're driving down the street and it's just hitting in your face all the time. Every street corner where there's a gasoline station, you can see how high the prices are. But we're starting to see a downturn in oil prices. Maybe things will get better. And right now, there are reasons to be a little bit optimistic that maybe prices will pull back down a little bit.

MARTIN: Well, do high fuel prices - are we starting to see the impact of high fuel costs in the products that we want to buy?

GEEWAX: Yes.

MARTIN: For example, are the costs of, like, fruits and vegetables and things like that that have to be transported.

GEEWAX: Transported and also...

MARTIN: Are we starting to see that?

GEEWAX: Yes. Those things are in the pipeline, but you know, it's interesting. We had a new report on producer prices. That is, the wholesale prices that are going out there. And they're up. But retailers know that people are not getting raises. So whether or not those prices are going to get passed on to consumers is still a little bit up in the air.

MARTIN: You know, I heard something in what you said a minute ago. There's a hopeful note in there that gas prices or fuel prices might actually decline in coming months.

GEEWAX: A little bit.

MARTIN: Why would that be? They typically rise in the summer. Because there's more demand. Because more people are driving, taking vacations and so forth in this country. So, why would there...

GEEWAX: We had such a big spike. I mean, the prices just rose so quickly at a time of year when you didn't expect them to rise that quickly, that it caused people to change their behavior. You know, people really are taking the bus or walking. So that reduction in demand for gasoline has sort of registered with the oil companies and the gas stations and they actually are starting to lower prices a little bit because they're finding that people really can't afford to pay four dollars a gallon. So we're actually seeing the market work a little bit, where people are starting to drive less and therefore the prices are coming down a bit.

MARTIN: And, finally, we talked a lot about the fact that people are starting to replace things. They're starting to buy things that they had avoided buying. Are they buying big ticket items, too? Refrigerators, washers and dryers, cars, things of that sort.

GEEWAX: That's where you're seeing, really, some of the real advantages of deflation. Things like refrigerators have gotten cheaper. So there are people buying some of those kinds of things - taking advantage of some good bargains out there. And auto sales have been good for U.S. automakers, particularly. But I think that really right now where we're at with this is, it's such an interesting moment, because we're all just sort of waiting to see if people will this summer go out and really replace that summer wardrobe. I think a lot of us probably need some new clothes for summer. A lot of us probably have a gas grill in the backyard that needs to be replaced. And so, you know, we could see a nice rush of shopping this summer, back to school shopping that'll start up in July, August.

But if the gas prices don't come down, if there is enough inflation that it eats into your paycheck, if people don't get raises, well then, maybe those hopes will fade. But right now, there's reason to believe that we are moving in the right direction.

MARTIN: Well, if anybody does replace their barbecue, don't forget to invite me. Marilyn Geewax is NPR senior business editor. She joined us here in our Washington, D.C. studios once again. Marilyn, thanks so much for joining us.

GEEWAX: Oh, you're welcome. It was a pleasure.

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