My dear friends,
You interest in my writings, and your responses give me a great deal of satisfaction.
Thank you for trusting my observations.
I wish I was wrong.
I had to laugh.
Yesterday, the stock market was up 200 + points.
The spark for this rally was supplied by a surprise jump in consumer confidence. “The biggest increase in almost a year” they trumpeted . And then of course they add the idiotic addendum,” consumer spending comprises almost 70% of the U S economy”.
Now lets see, how should we interpret this amazing jump in confidence, from dire to just plain bad.
Could the fact that we have been bombarded with dire predictions and massive stock losses and a sharply contracting job market no longer count?
Is our attention span too short to stay negative past a certain date?
Perhaps the end of a very long weather challenged Fall, Winter ,Spring season has breathed a shot of optimisn in an otherwise frightening economic and social atmosphere.
“Its warm and sunny out, I don’t feel like worrying today. Perhaps I will buy a new bathing suit, or a pair of flipflops.Perhaps a new dress for my sweetheart.
A new Grill would make it less painful to stay home and skip some of those expensive restaurants.
Of course we feel less depressed its Summer!!!
Now reality check.
People are spending money differently than any time in the past 50 years.
Contrary to past recessions, where the wealthy appeared immune to economic squeeze, the higher priced stores are loosing market share and many are closing.(See Fortunoffs et al)
On the other hand discount stores are doing well, and the creative ones are growing.
These changes in shopping habits are becoming a permanent long term alteration in consumer spending.
Our interests have turned from extravagant trips and expensive new cars, to stay at home type improvements .
New large screen T V’s, and audio systems. Possibly even a jacuzzi to massage our clenched muscles.
We are purchasing gardening equipment and seeds to grow our own food, and alarm systems, guns .and safes to keep our homes secure and more enjoyable.
Americans appear to be acclimating to a more modest life style.
The world of “Charge It” is gone, possibly forever.
Shopping malls and restaurants are no longer a destination for spending orgies.
Eliminating debt by saving is the new investment to create wealth.
I read recently, that during the first quarter of 2009 Americans saved an annualized $450 billion, compared to $ 30 billion in 2008.
This economic fix, is the reality of our economy for years to come. You can’t spend to save, you must save to spend.
If only our government got it.