Updated from 8:49 a.m. EST
The December retail sales report demonstrated again what many investors already knew: what was supposed to be the worst holiday season in decades ended up not being all that bad.
Sales at U.S. retailers fell by just 0.1% last month, according to the Commerce Department. The consenus among economists polled by
was for sales to have fallen 1.4%. Excluding autos, sales fell by 0.1%, in line with expectations.
The March S&P 500 futures contract rallied initially when the sales data was released at 8:30 a.m. EST, but then fell back to where they were ahead of the report. Still, they're pointing toward a positive opening for stocks. Treasuries, in contrast, slipped slightly on the suggestion that economic health is a little closer, and the Federal Reserve will shift from a tightening to an easing regime sooner than thought. The benchmark 10-year note was lately off 4/32, pushing its yield up to 4.89%.
"It's consistent with the very strong performance of the consumer in the fourth quarter," says Credit Suisse First Boston bond strategist Mike Cloherty. "It's pretty shocking given all that took place right before the quarter started."
Overall, sales rose by 3.4% in 2001, in line with sales growth in 2000 -- a testament to how little the recession has affected American's penchant for spending. That the consumer hung in so well even after Sept. 11, says Cloherty, has allowed U.S. companies to rapidly reduce inventories. Now that the inventory-process has apparently come to an end, economic growth should be able to return quickly -- if it hasn't already begun.
The sales report does appear somewhat at odds with Fed Chairman Alan Greenspan, who last Friday painted a somewhat grimmer picture of the economy than most private economists have.