Hi Steven -
Retailers will have a tough time, especially due to high energy costs and a lower dollar.
When looking at consumer finances remember that most of the government statistics of saving rate, disposable income, etc. DO NOT include investment income or gains, onmly 'earned income' Since there are now 32 million stock ownig families, and maybe for 6-10 million those holdings are significant, there can be large errors in those numbers.
The other interesting new developmnet with consumer financeas is the ease with which most consumer debt can be 'rolled over' to a new 2.9% credit card. This can be done with a call to a 800 number or a one page form. So even for non-home owners, debt service is not a big a burden as it would have been 15 years ago.
Another factor is the large number of 2 income households, where both incomes are pretty good. If one spouse louses their job, spending may slow, but it won't stop and they won't miss mortgage payments.
The models of consumer finances and behaviour tend to be old and have not been updated- they seem to be based on the 1950s and 1960s.
So we always see these stories about "The surprising strength of the consumer"
I see the consumer slowing, but not dropping off a cliff, unless there is a big terrorist attack.
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The Europeans moving money out is a big deal, and this trend could continue for a long time, and result in a much lower market. |
