The U.S. consumer may be staging a mini-comeback, according to Reuters. Despite the formidable combination of high unemployment, stingy credit terms and frayed confidence, there are some signs that spending is on the upswing. While that doesn't mean consumption is roaring back to pre-recession levels, it suggests the still-wobbly economic recovery is gaining some stronger supports. High-end retail stores, including Neiman Marcus and Saks Inc, posted stronger sales in February. Porsche AG's year-to-date U.S. sales are up 8.8 percent over last year's. Figures due on Friday are expected to show U.S. retail sales dipped slightly in February, although they probably rose excluding auto sales, which were hurt by Toyota's recalls. That would be a remarkably robust showing considering that big East Coast cities New York, Philadelphia and Washington were hammered by snowstorms that kept shoppers away from stores. Richard Hastings, consumer strategist at Newport Beach, California-based Global Hunter Securities, said retailers were seeing a flurry of demand after two recession-ravaged years, and for good reason. Stock market gains have lifted household wealth, job losses have slowed and falling prices for big-ticket items such as flat-screen televisions have enticed buyers, he said. Hastings divides consumers into two categories -- those who are out of work or underemployed and those who have jobs. At the worst point in the job market, nearly 20 percent fell into the first category. "That gives you 80 percent to work with," he said. Thanks to government tax breaks and retail price cuts, those among the 80 percent have more buying power, and it appears they are beginning to use it. Hastings has been tracking a nascent recovery in discretionary spending that began in November with a pick-up in demand for home furnishings. The next stage would be growth in such items as furniture and appliances, and those are the categories he will be watching in Friday's report. Investors seem to have caught on to retail's rebound. The Standard & Poor's retailing index has jumped 94 percent in the past year, outperforming the broader S&P 500 index which is up 70 percent over that period. WEALTH EFFECT A stronger U.S. consumer would be welcome news to U.S. trading partners, particularly China, which relies on exports for growth. China's February trade figures are due on Wednesday, and economists polled by Reuters are looking for a nearly 39 percent year-over-year jump. Some of the U.S. consumer revival can be traced to the stock market's recovery, which has helped to patch a gaping hole in household wealth. At the depth of the recession, in the first quarter of 2009, household wealth was down $16 trillion from the pre-recession peak of $64.5 trillion. Nearly $5 trillion of that had been recouped as of the third quarter of 2009. The Federal Reserve will release fourth-quarter wealth figures on Thursday, and they are likely to show further recovery. Some economists see this as one vital piece of a virtuous cycle building in the U.S. economy. Bernard Baumohl, chief economist at the Economic Outlook Group in Princeton, New Jersey, said in addition to the rebound in consumption, business spending was picking up, exports were growing, and government stimulus money was flowing freely. The next critical ingredient is jobs, and Baumohl thinks that will come very soon. "Once payrolls turn positive, which could happen as early as this month, it will raise household income, improve consumer confidence and increase spending --- all factors that will fortify this recovery," he said.
