Though American drivers are growing weary of higher gasoline prices, the added cost doesn’t appear to have cut into their spending, according to the latest monthly numbers posted by retailers. One reason may be that consumers' paychecks have grown at a healthy clip so far this year, helping to offset the higher cost of filling up at the gas pump.
Sales figures for the month of April were better than Wall Street forecasts for most major retailers. Wal-Mart, Costco., Nordstrom and Limited were among those reporting higher than-expected gains.
“Rising fuel costs were overshadowed by the customers’ response to merchandise in apparel for the entire family and consumables,” Tom Schoewe, Wal-Mart’s chief financial officer, said in a statement.
Retailers that cater to teenagers did especially well; America Eagle posted a 19 percent gain, Pacific Sun was up 14 percent and Abercrombie & Fitch posted a 17 percent gain.
“Consumers beat expectations,” said Jharonne Martis, an analyst at Thomson Financial. “It seems like all stores got traffic.”
Based on results from 54 retailers, 35 beat estimates, one met, and the remaining 18 missed, Martis said. Overall, retailers rang up their best performance since March 2004, according to a survey by the International Council of Shopping Centers and UBS.
And though pump prices continued to rise through April, retailers were upbeat about in their outlook for the coming weeks.
“I think if they were worried about gasoline at this point, they would have guided lower for the month of May," said Bear Stearns Retail Analyst Christine Augustine. “So it sounds like -- odd as it may seem -- we are kind of getting used to these gas prices.”
Though no one can predict where gasoline prices are headed, pump prices usually rise this time of year along with demand, as warmer weather arrives and the summer driving season approaches. That pattern has been repeated this spring.
But there are also signs that the high prices at the pump finally may be cutting into gasoline demand. Wednesday’s weekly report from the U.S. Energy Department showed gasoline demand flattening and inventory levels rising. As a result, gasoline prices on the futures markets have fallen more than 10 cents a gallon since
Even as gasoline prices take a bigger bite out of household budgets, American workers posted strong wages gains in the first quarter of the year, according to government data released Thursday. After dipping slightly at the end of last year, productivity jumped 3.2 percent in the first quarter, according to the Labor Department. On average, hourly workers saw a healthy 5.7 percent gain in wages from the previous quarter – more than double the gains posted in the last quarter of 2005.
"We're clearly at the point in the business cycle where we can expect to see wage gains for American workers," said Treasury Secretary John Snow in a prepared statement.
Lower income household are bearing the brunt of the increase in pump prices, which are up nearly 70 cents a gallon from this time last year. But gasoline still represents a small portion of the average household budget. For a typical consumer who drives about 1,000 miles a month in a car that gets 20 miles to the gallon, the added cost works out to about $35 a month.
"Consumers balance sheets overall are in good shape," said Brian Tunick, a retail analysts at J.P. “Unemployment obviously is very low, the equity markets are at record highs, housing values are still very strong. Clearly, on the lower end, I think it does take a bigger chunk of peoples' disposable incomes. But overall right now, I think people feel pretty good about the economy.”