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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (66245)	7/15/2005 10:06:51 PM
From: elmatador	Respond to of 74559

The end is... not quite yet "They live in a world where they keep spending. Low interest rates help, of course. Consumers have also been helped by the fire sale at General Motors, where employee discounts on car purchases were expanded to all Americans. This helped fuel a 4.8 per cent increase in auto purchases, which buoyed the retail sales figures. As any bear will tell you, deep discounts by GM are not the best engines to drive an economic recovery." <<Printing is good!!!>> By Stephen Schurr, US Markets Editor Published: July 14 2005 21:05 \| Last updated: July 14 2005 21:05 Those who have been predicting Doomsday for the US economy may have to amend their “The End Is Nigh” signs to “The End Is, Oh, About Six Months Off”. Yesterday's economic data suggest that what lies around the corner is not Armageddon, but perhaps a US gross domestic product growth number that may come in at above 4 per cent for the second quarter. The consumer price index, the key measure of inflation, edged up 0.1 per cent in June, unchanged from May and below the 0.2 per cent expected by economists surveyed by Bloomberg. Meanwhile, retail sales rose a better than expected 1.7 per cent. These economic figures, coupled with Wednesday's decrease in the budget deficit, present a picture that is unnerving to bears: an economy that is growing solidly without triggering inflation. There is not even a soft patch to fret about. Wall Street is taking the news and running with it, with the S&P 500 approaching its highest levels in four years. But is everything as rosy as the data suggest? The numbers clearly mean the bears will have to reassess their views or at least the timing of when things play out. Nonetheless, there are a few morsels of pessimism for them to pluck from the latest headlines. First, the CPI figures have come under criticism as an inaccurate reflection of the inflation environment. Energy prices are up, healthcare costs are up, housing prices are through the roof and education is on the rise. Take all those expenses out, and inflation is as benign as the CPI numbers suggest. But consumers do not live in the CPI world. They do, however, live in a world where they keep spending. Low interest rates help, of course. Consumers have also been helped by the fire sale at General Motors, where employee discounts on car purchases were expanded to all Americans. This helped fuel a 4.8 per cent increase in auto purchases, which buoyed the retail sales figures. As any bear will tell you, deep discounts by GM are not the best engines to drive an economic recovery. A consumer recession in the US, which would be the first in 14 years, may yet happen. But the bears must acknowledge that the consumer still has legs even if they have been bought on credit.