The Bush economy

CBS Marketwatch:

The [National Retail Federation] said Monday that it is expecting consumer spending to rise 3.7 percent in the first quarter -- paltry on a year-over-year basis -- and noted that consumers "could eventually become tapped out."

"The consumer has been remarkable in shouldering this economic expansion, but now something has got to give," said Rosalind Wells, the association's chief economist. This year's projection pales in comparison with last year's 9.9 percent leap in sales in the first quarter -- and that's part of the problem, Wells conceded. However, she's worried that sluggish job and wage growth will keep dogging retailers, especially discounters.

"The labor market will continue to expand this year, though our concern is that modest employment growth will lead to modest income growth, which will put a financial strain on consumers," she said. Consumer spending accounts for two thirds of gross domestic product, which measures the purchase of final goods and services.

Still expected to score big at the cash registers are luxury retailers, who keep ringing up sales as the divide between the wealthy and the poor grows. Pricey retailers also are reaping some of the only benefits of a weak dollar: hot demand for luxury products by international tourists.