Everything must go! Thanks to radical price-slashing, retailers have reported positive figures.

Consumer index positive, thanks to Govt spending and retail price slashing

The outlook is good, according to pundits in the US and at home, with retail sales figures showing a return to positive in the first 2 months of 2009.

In the US retail sales, excluding automobiles, rose, which according to the Financial Post, suggests consumer spending — the main driver of the economy for years — may be stabilizing.

'The latest retail sales report is an important one, for it increases the probability that this recession is starting to wind down,' Bernard Baumohl, chief global economist with the Economic Outlook Group said.

'Greater household purchasing power and aggressive discounting are working their magic to lure customers back into stores.'

According to the Westpac-Melbourne Institute, Australian consumer confidence fell slightly in March but remained 'surprisingly good' due largely to a massive government economic stimulus package, according to a survey released Wednesday.

The consumer sentiment index was 85.6 points in March, down 0.2 per cent month-on-month and 3.4 per cent lower than a year ago.

'On the face of it this is a surprisingly good result,' said Westpac chief economist Bill Evans.
'Normally, we would have expected a solid fall in the index given the stream of negative news,' he said, citing declining global economic conditions, falling share markets, job losses and a contraction in the Australian economy.

Evans said the government's 42 billion Australian dollar (27.3 billion US) stimulus package, which was passed by parliament last month, appeared to have put a floor under consumer confidence.

'It may be that the index is now finding a base,' he said.

The package includes 28.8 billion dollars in spending on schools, housing and roads over four years, tax breaks for small businesses and cash handouts totalling 12.7 billion dollars.

The government estimates the plan will boost economic growth by 0.5 percentage points in 2008-09 and between 0.75 and 1.0 points in 2009-10, supporting up to 90,000 jobs.

However, the central bank says it is unlikely to translate into increased demand in the economy until later in the year.