Has anybody noticed consumer credit card debt creeping back up to pre-Great Recession levels? And of course, Friday’s Consumer Sentiment figures showed another uptick. Consumerism is coming back- hooray! Case in point, some of the best stock performers that correlate well with Consumer Confidence are small consumables such as retail clothing companies, like Bon-Ton Apparel (BONT):
(Chart created using Hidden Levers app)
This would be great news if unemployment wasn’t still so high; only 36,000 jobs were created last month, keeping unemployment roughly at four percentage points above our historical average. And rumor has it that business owners aren’t in any rush to lose revenue by hiring more employees. Sure, the fact that consumers are easing back into buying more than basic necessities is great for GDP, but isn’t anyone else worried that we haven’t learned our lesson as consumers over the past two years? Buying consumables on credit is largely how we got into this mess in the first place, no? I’m going out on a limb here and guessing that some of those busting out the plastic are those who are still unemployed or underemployed but are comfortable using credit because employment is nigh. If we undergo a double-dip recession, the effects it will have to those consumers who were prematurely sentimental will probably suffer even more than the first-go around from late 2007:
I’m not wishing for the double dip or anything, but these hard lessons might be what we need as a society to learn that consumerism isn’t the problem – it’s consumerism on credit!