Home > Main > Watch what I do, not what I say: The U.S. Consumer

Watch what I do, not what I say: The U.S. Consumer

December 28, 2010

In the last week we have had a flurry of positive economic numbers.

Still, U.S. Consumer Confidence is down.  This is despite a 5.5% increase in spending from MasterCard over last years holiday season.  If you look at the Gallup numbers, you can see reported spending was a bit higher, but not 5% higher.

I am starting to think there may be a significant underestimation of spending in the Gallup numbers, due to the general idea of the word of the year, “Austerity”.

The U.S. Consumer does not feel very confident, but this recovery has been stable for the last few months.  Unless there is a large disruption in the next few months, expect consumer confidence to increase as the news becomes consistently positive.  Of course, this might be the case if there are large bank nationalizations, or the banking system freezes up again due to a mis-management of perceptions of the Euro Solution.

If we begin to add substantial numbers of jobs, or hours worked increases, we could see a dramatic shift in sentiment.

GDP numbers do not care about the attitude towards spending.  All that matters is the amount of economic activity.  Tax receipts are up, spending is up, corporate profits are up, and inflation is tame.  We may see a rather large GDP print for Q4.

 

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