It appears that the East Coast dodged a disaster of historic proportions. Conditions are not good and many are displaced, but it seems all the preparation might have mitigated the worst of Hurricane Sandy. What the hit to the US economy will be no one knows just yet, but the storm will have an effect, no doubt. Keep sending the good energy to the folks back there, though, as they still need it …
Whatever the damage to the US economy from the storm, the economic data coming out for October suggests more forward movement. The most positive data is the latest consumer sentiment survey.
- Consumer sentiment rose to its highest level in five years in October as Americans were more upbeat about prospects for the economy and their own finances. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment rose to 82.6 from 78.3 in September. It was at its highest level since September 2007.
Not only is the American consumer more upbeat on the future, but in the present, the consumer seems to be in a better frame as well.
- The barometer of current economic conditions gained to 88.1 from 85.7, while the gauge of consumer expectations rose to its highest level since July 2007 at 79 from 73.5.
Keep in mind, in July 2007, the US economy looked a whole lot better on the surface than it does now. As well, the market looked pretty darn good also. Unlike Hurricane Sandy, which everyone saw coming from “a mile away,” few saw the economic storm that would collapse the US economy coming. Since then, we have tuned our financial radar, tightened down the financial hatches, and are now better prepared to see such devastation, if it should come.
One “early-warning system” of a pending economic maelstrom is the US consumer. Given that the indicators above were actually lower in July 2007 than they are now suggests the consumer back then felt more uneasy than they do now. Interestingly, the US consumer should have felt uneasy, as the economic data underneath the surface had begun to change. Corporate profits were dropping, Real Gross Private Investment began faltering, the housing market had begun to slump, and employment began to fall. In that survey, nearly half of all US consumers reported their finances had recently worsened. Today, the data underneath is going the opposite way, aside from the weaker earnings reported, which will change next quarter, I am certain.
- Consumer spending rose solidly in September as households stepped up purchases on automobiles and a range of other goods, setting up a firmer base for consumption this quarter.
My point today is that even though the big picture is still a bit muddy from US politics, the pending fiscal cliff, and the overhanging US debt, an economic disaster even remotely similar to 2008 is not lurking out over the ocean. True, things could fall apart, but for now, go make some money, maybe go buy a car company.
- Ford Motor Co on Tuesday posted a third-quarter profit that trounced expectations due to higher vehicle prices worldwide and record-high profit margins of 12 percent in North America.
Trade in the day; Invest in your life …
