The Death of U.S. Consumers: Not Yet, But Soon

It's that time again -- the day of the month when I put together a Market Observation column for my good friends at Financial Sense. Below is a snippet from Thursday's commentary, entitled "Interesting Divergences":

Many people have been talking about the death of the U.S. consumer. But if you look at personal consumption expenditures (better-than-expected data for August was announced earlier today) relative to personal income (also reported today) and nominal gross domestic product, both ratios have just hit new record highs.

No doubt spending in recent months has been bolstered by the government’s “cash-for-clunkers” scheme, as well as a heavy promotional push by nervous retailers and other durable goods makers.

That said, once consumers start coming to terms with the fact that circumstances won’t be returning to “normal” and the so-called recovery is an illusion, it shouldn't be long before we see a dramatic about-face in spending.

Comments

[notsosmart:]

this holiday season will not be good.cash for clunkers grabbed a lot of $s(some regret) from consumers.millions unemployed.there will be lots of store closures(more unemployment) in '10.something not right with this rising market. oct.may correct.this month has done it before.

Oct 02 11:40 AM

[Old Trader:]

Actually, it just ocurred to me, that along with the C4C, there was also a "push" from the back to school period. Despite the fact it was weaker than anticipated/hoped for, there still was SOME effect, which won't repeat.

Oct 02 04:53 PM

[billddrummer:]

To Old Trader,

You're right, retailers seemed unusually strident this back to school season compared with previous years. I work in specialty retail (BBY) and the pressure was on to grab market share in computers, dorm furnishings and anything else we sell.

I think the American consumer is exhausted.

Oct 02 06:04 PM

[Old Trader:]

Bill,

I suspect that you're correct!


On Oct 02 06:04 PM billddrummer wrote:

> To Old Trader,
>
> You're right, retailers seemed unusually strident this back to school
> season compared with previous years. I work in specialty retail (seekingalpha.com/symbo...)
> and the pressure was on to grab market share in computers, dorm furnishings
> and anything else we sell.
>
> I think the American consumer is exhausted.

Oct 02 06:46 PM