Going Up?

In the first weeks of the new year, retailers are reporting better-than-expected sales, and a better rate of improvement this month versus a year ago (4 percent gain) than last month (0.7 percent). J.C.Penney, Kmart, Sears and Target are among those reporting that they've sold more goods in the last three weeks than they planned.

Of course, economists are quick to point out that consumer spending has nonetheless slowed since the middle of 2000, and that the January goals the retailers are beating were made during the troubling final months of 2000, months of rising energy costs, a dropping stock market and the thorny, long-unresolved Presidential election. “The economy has clearly softened,” said J. Alfred Broaddus, president of the Richmond (Va.) Federal Reserve Bank in a speech last week. “For all the current media and public focus on the economy's softening, though, it is not clear at this point that the economy as a whole is slowing precipitously.”

A mid-January Gallup Poll on consumer confidence reported that 67 percent of respondents called economic conditions “excellent” or “good,” down from August 2000 (74 percent) but still higher than at any time from 1992 to 1998. Also, 63 percent said they expected to be “better off” a year from now than they are today.