Is an Upside Surprise in Consumer Spending Coming?

Includes: DIA, QQQ, SPY
by: Old Trader

Given that the employment situation in the US is still a long way from rosy, it might seem totally ludicrous to entertain the possibility of a bump upwards in consumer spending, but it might be hasty to dismiss such an occurrence out of hand.

According to IRS Commissioner Douglas Shulman, the average income tax refund is up almost 10% from a year ago. Largely the result of tax credits that were a part of last year's stimulus plan, as of March 12, the average refund rose $266, to a record $3036.

Of course, the $64 question is, how much of those refunds will be spent, and how much will go either into savings, debt reduction, or some combination of "all of the above". Human nature being what it is, even though prudence might dictate that every last cent go towards savings and/or debt reduction, given the economic "angst" the average American has suffered, over the last 16-18 months, Mr/Ms 6 Pack may well decide they're due a bit of splurge, with at least a portion of the money.

Its important to remember, this is yet another one-time "shot in the arm" for consumer spending, should it, in fact, occur.

Disclosure: No positions