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For retailers, it was a holiday season after all

Alisa Roth Jan 12, 2007

KAI RYSSDAL: They try hard — the people who make economic projections. It’s no easy task to figure out something as fickle as the American consumer. But try they do, if only because consumer spending’s what drives most of the economy. The Commerce Department reported this morning retail sales actually rose in December. To the highest level in five months. Marketplace’s Alisa Roth has more from New York.

ALISA ROTH: Last month, retail sales rose 0.9 percent. Those are the best retail sales figures we’ve seen since July. The Commerce Department says Americans did more holiday shopping than economists were expecting.

GINA MARTIN: At the beginning of just about every holiday season, we get the “The season’s not going to be so good” speech.

Wachovia economist Gina Martin says we shouldn’t pay attention.

MARTIN: The truth is that U.S. consumers are much more resilient than I think a lot of commentators and analysts give them credit for.

She says electronics stores in particular did well. Seems Santa left lots of flat-screen TVs and iPods under trees this year.

But just because a store sells a lot doesn’t mean it’s making lots of money.

RICHARD HASTINGS: This was a year of really good sales and not very good profits.

Richard Hastings is a retail analyst at Smythe Bernard Sands.

HASTINGS: You can have actually pretty crummy profitability if prices decline much faster than you can adjust to how much it costs the retailer to buy the merchandise.

Tough competition for customers had retailers like Circuit City and Best Buy cutting prices on hot items all season.

But today’s figures may not tell the season’s whole story. If the winter weather turns cooler, it could give clothing stores another shot at profitability. And shoppers still have plenty of time to redeem all those gift cards.

In New York, I’m Alisa Roth for Marketplace.

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