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U.S. Consumer Buying the Economic Recovery

U.S. Consumer Buying the Economic Recovery (Bloomberg)

A recent Bloomberg survey of 76 economists found that American households increased spending by the highest amount in the last five months. While holiday discounts and year-end pricing are in effect, and partly responsible for the rise, the data reflected that increases are occurring in product lines not usually found to be a part of seasonal bumps, including: automobiles, furniture, appliances and durable goods. The survey also found that incomes increased 0.2 percent in November, as opposed to dropping 0.1 percent in October. According to Richard Moody, chief economist at Regions Financial Corp. of Birmingham, Ala., “We’re farther along in the restoration of household balance sheets, and that’s turning up in some of the consumer spending numbers.” Proponents of easing the Fed’s stimulus plan are grouping this finding, along with the other subjective data interpretations, to justify the Fed’s reported easing of stimulus in January of next year. We’ll have to see if all of this extra consumer spending, and higher income, has an effect on the markets after the Santa Claus rally runs out of steam.

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