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And Now It's Time for Retailers to Start Spending

The latest batch of economic reportsis providing fresh evidence that consumers are starting to spend again, and the buzz is "a lot better" at an annual retail investors conference in New York, said Dana Telsey, CEO and Chief Research Officer of Telsey Advisory Group, which runs the conference.

Woman shopping for clothes
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Woman shopping for clothes

"The consumer is coming back," Telsey told CNBC. "Every company still maintains a cautious optimism. They are planning cautiously, but they are a bit more on the offense given that now they are increasing their marketing investments, they are doing online, and they are going overseas."

They also are starting to think about hiring new workers again, Telsey said.

Correctly judging the pulse of the consumer is important. Retailers are placing big bets on how spending will be in the fall and Christmas holiday season.

According to Telsey, retailers are likely to still err on the side of caution and keep their inventories lean.

This will likely mean that the days of the 75 percent and 50 percent markdown are over, she said. However, opening price points will continue to be lower than they were before the recession hit.

Some of Telsey's favorite stocks include Limited Brands, which she said is benefiting from new product introductions, as well as Aeropostale and Talbots.

  • To see Telsey's full interview with CNBC, click here to watch the video.

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