WASHINGTON — Shoppers and businesses are feeling better about the recovery.
That was the encouraging message from a trio of economic reports Wednesday — and from Federal Reserve Chairman Ben Bernanke, who told lawmakers that the country's modest rebound is sustainable.
Retail spending rose sharply in March. Consumer inflation remained all but invisible. And businesses boosted their stockpiles in anticipation of higher shopper demand.
Economists closely watch retail sales for signs that consumer spending, which fuels about 70 percent of the economy, is recovering. Shoppers cut back sharply and boosted their savings during the Great Recession. Some appear to be spending more freely now.
Haroon's, the women's dress store in Foothill Village, 1326 Foothill Drive, has experienced an increase in sales this year compared to last, owner Haroon Maniar told the Deseret News.
"When everything went down, it affected us," he said. "We carry a range of clothing from lower to high (price). We saw some decline. We have a lot of regular customers. We did get affected, but it was not a disaster."
Haroon's used to be located in Crossroads Plaza and Trolley Square but closed the stores and opened the Foothill store when both malls underwent renovations.
It took some time for customers to find the new store. "Then the recession started," Maniar said. "But they're finding us now, and we're seeing new customers all the time."
Smith's Food and Drug is experiencing increased sales and customer loyalty, spokeswoman Marsha Gilford said.
"We anticipate a slow recovery through the rest of the year," she told the Deseret News. "Some of that has to do with food deflation, "which translates to lower prices for customers," Gilford said.
"Consumers are coming out of their shells despite a very weak labor market," said Zach Pandl, an economist at Nomura Securities. They have "emerged from the financial crisis with fewer scars than we had feared."
Pandl estimates consumer spending rose by as much as 4 percent in the January-to-March quarter. That would more than double the 1.6 percent rise in last year's fourth quarter. And it would amount to the biggest quarterly gain in three years.
The gain comes largely from reduced saving. Disposable income dipped in the first quarter, according to Nigel Gault, chief U.S. economist at IHS Global Insight.
Consumers' willingness to spend more despite scant pay increases means they are likely "looking ahead to better times," Gault said.
In part, that's because companies in March added the most workers to their payrolls in three years. Gault expects incomes to rise in future months as hiring improves.
Last week, chain retailers reported strong sales gains in March. Discounter Target Corp., department store Macy's Inc., clothier Gap Inc. and Victoria's Secret parent Limited Brands Inc. posted double-digit increases. Overall, sales in stores open at least a year rose 9 percent last month, based on an index of retailers compiled by the International Council of Shopping Centers.
Automakers have shown strength, too. They reported that sales leapt 24 percent in March, compared with a year earlier. Car companies sought to match incentives provided by Toyota Motor Corp. Toyota's sales jumped 41 percent. General Motors Corp. said new-car sales rose 21 percent. Ford said they rose nearly 40 percent.
April is likely to be slower, as the impact of those auto promotions fades, said Jessica Caldwell, analyst at the automotive Web site Edmunds.com. In addition, April lacks any major holiday sales weekends.
"The incentive messages started to get old, so not as many people are out there getting deals," Caldwell said.
Bernanke said Wednesday that the Fed reported the recovery is spreading to most parts of the country. Merchants are enjoying better sales, and factories are boosting production, but companies are still wary of ramping up hiring, the Fed reported. But Bernanke also told Congress that the recovery is not strong enough to shrink the unemployment rate much.