`I Got It `Cuz It Was On Sale'

Recent retail-sales data seem to confirm that the long-awaited rebound in consumer spending has arrived. With May and June receipts up 0.9% and 0.7%, respectively, sales in the second quarter surged at a 3.8% annual clip.

Economist Joseph G. Carson of Dean Witter Reynolds Inc., however, doubts that a new spending spree is under way. He points out that the biggest increases were in sectors where heavy discounting were helping spark consumer interest.

Sales at general merchandise stores, for example, increased at a 10.5% annual rate in the three months ending in June--just as apparel prices tumbled at a 2.5% annual rate. Similarly, previously slumping furniture-store sales rose at a 3.1% annual clip in the second quarter, as furniture prices fell 1.4%. And the healthy pickup in car sales at dealers seems to have been fueled by cash rebates running as high as $2,500 on some models in June.

Such bargain-hunting merely borrows sales from future demand, maintains Carson. "I still expect slow growth in consumer spending, punctuated by occasional spurts as retailers attempt to lift demand with discounts," he says.

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