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Consumer Stocks May Weather Retail-Sales Slump: Chart of the Day

Feb. 26 (Bloomberg) -- Retail sales are rising fast enough to indicate the effects of tax-law changes and gasoline-price increases on consumer spending will be fleeting, according to Jonathan Golub, UBS AG’s chief U.S. equity strategist.

As the CHART OF THE DAY shows, last month’s 4.4 percent sales increase from a year earlier almost matched the average 4.6 percent pace for the previous 20 years. The comparison is based on figures compiled by the Commerce Department.

“The general trend appears to be quite healthy” even though the end of a payroll-tax break, a delay in income-tax refunds and higher gas prices are weighing on consumers, Golub wrote yesterday in a report with a similar chart.

Golub favors makers of food, beverages and other staples, as well as companies most dependent on consumers’ discretionary spending. His view ran counter to a recommendation yesterday by David Bianco, a strategist at Deutsche Bank AG. Both strategists are based in New York.

Bianco reaffirmed “underweight” ratings on staples companies and retailers in a report, citing a “continuing struggle of low- to middle-income households to make ends meet.” His call means the two groups ought to be a smaller percentage of investors’ holdings than their weight in the Standard & Poor’s 500 Index would suggest.

Social Security levies rose 2 percentage points on Jan. 1. Tax refunds through Feb. 14 fell 29 percent from a year ago to $55 billion, according to the Treasury Department. The average price for unleaded regular gas has risen as much as 15 percent this year, according to the American Automobile Association.

Consumers may offset the higher payroll tax mainly by cutting into debt repayment and savings, rather than spending, Golub wrote. Refunds will soon accelerate, he added, while gas prices are poised to fall.

To contact the reporter on this story: David Wilson in New York at

To contact the editor responsible for this story: Chris Nagi at

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