Shoppers return after winter break

April 19, 1993|By New York Times News Service

When a blizzard gripped the East Coast in March, it took a wicked slice out of the economy and raised questions about the durability of the expansion. But as the weather has improved, consumers have been returning to stores -- and business executives and economists are breathing easier.

"Once the weather broke, they're flocking back into the stores," said Bernard Marcus, chief executive of Home Depot, the nation's largest home improvement retailer.

Judi Freni, an associate merchandiser at London Fog Ladies Sportwear, a national chain of discount outlets, also saw an improvement. "In the last week our business has picked up dramatically," she said.

Nor are the gains limited to retailers. Early April car sales are above early February's level. Mortgage applications remain at a high level. Weekly jobless claims are lower. And the ABC/Money magazine poll suggests that consumer confidence has rebounded in the last month.

That is not to say that the rest of the year will continue on track.

Executives and economists alike worry that the talk of new taxes from Washington could hurt consumers' willingness to spend.

They are particularly worried that a national sales tax in the form of a value added tax would weaken consumption and that possible new mandates for employers -- like a minimal health insurance package for workers -- would drive up business costs, including the costs of hiring new workers.

Kenneth A. Macke, chairman of Dayton Hudson, the department store and discount retailer based in Minneapolis, said: "We think consumers remain extremely leery. With good reason: They are being bombarded with budget news. They are being bombarded with health care plans. Last Thursday, they were treated to the VAT tax."

Nor does the improvement settle the question -- asked by Clinton administration officials who are plugging for a public works jobs package -- of whether job gains will pick up strength.

A reliable reading on the economy's basic momentum, economists say, probably will not be available until May data start to come in. March was knocked down by bad weather. April is being affected by catch-up buying and the fact that Easter fell earlier this year than last.

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