High Gas Prices Fail to Dampen Retail Spending

Soaring gasoline prices did little in February to deter consumers from spending money on other goods such as autos, food and clothes, a government report showed Tuesday.

And U.S. manufacturers report that they see rising earnings and prices, and slower overall economic growth, according to an annual survey by the National Assn. of Manufacturers.

Of the 2,500 manufacturers surveyed, 48.7% said they believe their earnings will grow as much as 5% this year, and 15.2% see earnings growth in excess of 6%, said Jerry Jasinowski, president of the NAM, in the organization’s annual survey on the outlook for business and the economy.

About a third of those surveyed--34.1%--believed the economy would grow 2% to 2.5% this year, while 28.2% said growth would fall between 2.6% and 3%. The group also expects consumer prices to increase this year. The economy expanded at a 4.1% or faster rate in each of the last three years, and accelerated to a 6.9% annual rate in the final three months of last year.

For the month of February, retail sales rose 1.1% after rising 0.4% in January, the Commerce Department said. The gain included the largest increase in the value of gas station sales in 10 months. Even when gasoline sales are excluded, sales still rose 0.9%.

“Gas prices may be increasing, interest rates may be increasing, but they don’t seem to have affected the customers here at all,” said Nick LeMasters, general manager of the Cherry Creek Mall in Denver. “We had record sales in January and we expect to see the same” when February’s results are tallied this week.

Last month’s sales gain was paced by a 1.4% increase in car and truck sales, which followed a 3% rise in January.

Spending “should stay strong as long as the labor market remains tight, consumer confidence remains high and the stock market is relatively stable,” said Marilyn Schaja, a money market economist at Donaldson Lufkin & Jenrette Securities Corp. in New York.