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.