So, what will it take to change substantially the mindset that says the U.S. economy is marching back into recession? What will it take to raise consumer sentiment? What will it take to change business sentiment? After all, consumer sentiment came in for September about where it was in August (low) and business sentiment actually dropped. Perhaps, and I say maybe, it is time to throw out the month-to-month surveys and start going with the actual numbers. I like this idea because I am sick of everything revolving around polls. The real numbers, that’s what I want …
U.S. consumers stepped up their spending on retail goods in September, a hopeful sign for the sluggish economy. They spent more on autos, clothing, and furniture last month to boost retail sales 1.1 percent, the Commerce Department said Friday. It was the largest gain in seven months.
Do the above numbers reflect a consumer all tied up with fear and uncertainty? Add to the above the largest “back-to-school” spending since 2006. Now, does any of this square with surveys that tell us how fearful the consumer is? Okay, for the sake of argument, let’s go with the consumer sentiment data. What about business sentiment, then? Check out the September data below.
A separate Commerce report showed businesses added to their stockpiles for a 20th consecutive month in August while sales rose for a third straight month. The increase suggests businesses were confident enough in the economy to keep stocking their shelves.
Now, the Consumer Board Measure of CEO Confidence tells us that CEO confidence dropped 13 points in September, yet, the numbers tell us something else. And then we come back to corporate earnings …
How about that Google? The company’s earnings jumped 26% and it hired over 2,500 people in the third quarter of this year. Maybe someone should ask Larry Page about his confidence. Oh, wait, we don’t have to. He let us know when he said the past quarter was “gangbusters.”
I don’t expect any of the current sentiment barometers we now use will go away, even if I wish they would. I don’t expect that the market will behave any differently because of Google, the September retail sales numbers, or the continuing inventory buildup from businesses. I do expect, however, that the market will come to a crossroads in the next couple of weeks. One path points to a comprehensive plan to resolve the European issues and the other points to, well, no credible plan. Depending on which path opens up, the market will jump for joy or it will sink in despair. Given this simple frame, it is understandable that the market remains uncertain.
As to the consumer and business sentiment, well, they might think things are bad when asked, but, in reality, they both seem to be getting up every day and doing their jobs.
Trade in the day – Invest in your life …
