Custom Search

Thursday, March 11, 2010

The consumer is spending again

Wait--that wasn't supposed to happen! Oh My!  Didn't Pimco's El-Erian warn us about the new normal? But his new normal is the old normal! How about all the other bears? But why even bother regurgitating their names?

They are just flat out wrong!

Of course, these folks couldn't figure out that a rising stock market, (of which, of course they didn't see coming even though it was a freight train heading right towards them) would help the consumer!

WSJ
U.S. household wealth fell by $14 trillion during the recession, sapping confidence and holding back consumer spending. Now, it is staging a comeback.

Spending growth has since resumed—a source of surprise and widespread skepticism given the steep contraction in consumer credit and the high 9.7% unemployment rate.

The wealth effect, or the confidence boost that comes when people's assets rise in value, helps explain this puzzler. Household net worth rose by about $5 trillion through September from its first-quarter trough, aided by the stock-market rebound and stabilization in home prices across much of the country. Thursday's flow-of-funds report is expected to show a further increase during the last three months of 2009.

Spending growth has since resumed—a source of surprise and widespread skepticism given the steep contraction in consumer credit and the high 9.7% unemployment rate.

1 comment :

whydibuy said...

So the blue line is for the "haves" with investments in the market.
The red line is for the working stiffs getting laid off or reduced hours-wages.