Some Good News?

Retail sales bumped up 1% last month. Of course, .2% of that was increases in gas prices alone. Still, even a one-month increase of .8% isn't something to casually dismiss. Or is it?

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said one possible explanation was that consumers have suddenly returned to their carefree spending ways despite weak consumer confidence readings and the credit crunch.

But he said a more likely reason was that rebate checks were giving a temporary boost to spending that would not last, resulting in weaker economic performance in coming months.

Almost everyone I work with have used their checks to pay off debt, pay back taxes, etc. We plan to blow ours on something completely frivolous (a 42" flat screen leads the pack), but we have no debt or back taxes, which puts us in a distinct minority. I suspect Mr. Shepherdson's second explanation is correct.