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Fred Lum/The Globe and Mail

The U.S. consumer is making a remarkable comeback, which is sending the stock prices of retailers higher. All this is happening despite awfully high unemployment.

The Dow Jones industrial index has also been climbing steadily and at 10,897 points as of Wednesday's close, it is up 66 per cent from its lows in March, 2009. But it's still far from its record high of 14,164 set on Oct. 9, 2007.

The stock market is signalling the economy is recovering. So are consumers. Consumers are "coming back" faster than the U.S. Federal Reserve, said economists with UBS Securities LLC, referring to the Fed's near-zero interest rate policy.

What are the expectations? The International Council of Shopping Centers is scheduled to release its chain store sales data for March today after reporting sales increased 3.7 per cent during February.

And Thomson Reuters is looking for strong same-store sales data from retailers such as price discounters Costco Wholesale Corp. and BJ's Wholesale Club Inc.; department store operators such as Kohl's Corp., Nordstrom Inc., Macy's Inc. and Saks Inc.; apparel stores; and teen retailers such as Abercrombie & Fitch Co. and Aéropostale Inc.

"The people who are still employed had cut back on spending, but there is pent-up demand and spending is increasing," said Jharonne Martis, director of consumer research for Thomson Reuters. Now, consumers are cutting back on their savings.

One of the most buoyant sectors is in teen apparel, where same-store sales for March are forecast to increase 7.3 per cent on a year-over-year basis, compared with the 13.6-per-cent decline a year ago. "Teen spending is a good proxy for discretionary spending," she said. Parents are opening their wallets and teens are spending.

Over all, same-store sales in March are forecast to be up 6.3 per cent from a year earlier, compared with a 5-per-cent decline a year ago.

And those higher sales are translating into earnings growth. The S&P 500 earnings during the first quarter are expected to be up 36 per cent from a year ago with consumer discretionary, along with the financials and materials sectors, leading the way, according to Thomson Reuters. The profit for the consumer discretionary sector is expected to have more than doubled during the first quarter from a year ago, although it lags the soaring profit levels of the other two sectors, which are expected to have almost tripled. However, exclude Ford Motor Co. and the consumer discretionary group's profit would be up 46 per cent.