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TheStreet Open House

Retail Picture Brighter Than Expected


NEW YORK (TheStreet) -- The U.S retail economy may be poised for a bounce back.

The latest MarketPulse survey from Chicago-based Information Resources tells the tale: U.S. consumers feel significantly better in the first quarter of 2013 than they did the last quarter of 2012.

"Consumers were feeling a bit of the gloom and doom as 2012 came to a close, because they simply didn't know what to expect on the financial front for the new year," says Susan Viamari, an IRI analyst. "With a looming debt ceiling crisis and expiration of the 2% payroll tax cut, they were preparing for another bumpy ride."

But U.S. consumers are proving more resilient than economists may have expected.

"Our survey finds that consumers weathered the latest round of economic storms very well and are feeling more optimistic than they have in quite some time," she says. "Of course, consumers will continue to be cautious about their spending, but we may see wallets open slightly more as we approach summer."

IRI has also just released its latest Shopper Sentiment Index, in which a benchmark index of 100 (higher shows stronger shopper strength, lower shows a weaker outlook) sets the pace for U.S. consumers.

While that index fell to 92 in December, IRI's most recent poll shows the index rising to 103, as U.S. consumers were apparently underwhelmed over talk of government budget cuts -- the "sequester" -- and expiration of the 2% payroll tax cut in January.

That tax cut was touted by economists and pundits as a sour note on an otherwise improving U.S. consumer economy. But only 28% of U.S. consumers say they now have less cash to buy food, clothing and other goods.

One key demographic -- millennials -- say they feel the impact more than the rest of the country. In that group, 38% say they have less money for consumer goods.

"This analysis is rather interesting, because it points to the fact that many consumers are finding it a bit easier to buy groceries in 2013, and that the payroll tax expiration didn't impact consumers as hard as expected on this front," Viamari says. "But it also highlights the continued struggle of millennials that we've seen for the last couple of years. Millennials are in the unenviable position of starting their independent lives in a tough economy, and they simply are having a hard time making ends meet."

One fly in the ointment for everyone could come from U.S. gas prices, which are on the upswing. The AAA Fuel Gauge Report says gas prices are up 8.8%, and that's cash that comes directly out of the wallets and pocketbooks.

Past gasoline prices, though, the feeling from U.S. consumers entering the busy summer travel season is vibrant -- something economists and retail business owners hope stays around for a while.

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