The consumer is spending - how many and for how long
Holiday consumer spending has been positive relative to the last year. How could it not be. The growth in spending has been a relief to investors.
This growth is a result of the gloom and anxiety modestly lifting for many of those Americans with jobs. After all, for those who have consistently had a job throughout the downturn the corner must seem to have been turned and now the holidays can be celebrated with a little more enthusiasm. People like to give and many expect to receive. It's that time of year.
This spending has been facilitated by merchants still being highly competitive with pricing and discounting early and often to avoid any surprises and to maintain their customer base in the early stages of the recovery. Weak earnings could only raise questions about management tactics while weak or falling revenue raises questions about a retailer's concept and brand, and that's everything.
Spending has also been held up by the ongoing extensions of unemployment benefits for the unfortunate and the rising stock market for the fortunate. Then there is also the issue of the underground economy, somehow an off-limits subject generally, but it has always existed in tight knit communities and has probably expanded as small businesses have work that needs to be done but put off adding employees as they wait for clarification of regulatory issues(tax and healthcare) and as they wait to have a clearer view of the economy's direction. It's also a possibility that with extended unemployment benefits available a few folks have been putting in some hours on the side. We are Americans.
So the consumer is loosening up and spending more, but that's an aggregate fact. With 10% unemployment, plus a significant number of underemployed in the workplace(former white collar worker behind deli counter as an example), and a completely uncounted number of people who have just given up looking for work, there are many people who are certainly not part of this growth in spending. The interesting, understandable, and disturbing fact is that the economy and financial markets can adjust and just move right along without them. A new foundation can be created for economic analysis and the growth off of this base can lead to a continuing recovery.
So the two questions now are, first, will this holiday spending be sustained into 2011 and build into something that can really be called a sustainable recovery, and second, will this possible recovery reach into the ranks of the un and under employed or will it simply benefit those who have ridden through the downturn intact?
This growth is a result of the gloom and anxiety modestly lifting for many of those Americans with jobs. After all, for those who have consistently had a job throughout the downturn the corner must seem to have been turned and now the holidays can be celebrated with a little more enthusiasm. People like to give and many expect to receive. It's that time of year.
This spending has been facilitated by merchants still being highly competitive with pricing and discounting early and often to avoid any surprises and to maintain their customer base in the early stages of the recovery. Weak earnings could only raise questions about management tactics while weak or falling revenue raises questions about a retailer's concept and brand, and that's everything.
Spending has also been held up by the ongoing extensions of unemployment benefits for the unfortunate and the rising stock market for the fortunate. Then there is also the issue of the underground economy, somehow an off-limits subject generally, but it has always existed in tight knit communities and has probably expanded as small businesses have work that needs to be done but put off adding employees as they wait for clarification of regulatory issues(tax and healthcare) and as they wait to have a clearer view of the economy's direction. It's also a possibility that with extended unemployment benefits available a few folks have been putting in some hours on the side. We are Americans.
So the consumer is loosening up and spending more, but that's an aggregate fact. With 10% unemployment, plus a significant number of underemployed in the workplace(former white collar worker behind deli counter as an example), and a completely uncounted number of people who have just given up looking for work, there are many people who are certainly not part of this growth in spending. The interesting, understandable, and disturbing fact is that the economy and financial markets can adjust and just move right along without them. A new foundation can be created for economic analysis and the growth off of this base can lead to a continuing recovery.
So the two questions now are, first, will this holiday spending be sustained into 2011 and build into something that can really be called a sustainable recovery, and second, will this possible recovery reach into the ranks of the un and under employed or will it simply benefit those who have ridden through the downturn intact?
posted by John Borden at 8:56 PM
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