Tuesday, August 3, 2010

Who Calls Consumer Spending Stagnation 'Unexpected"?

Stock markers bizarrely soared yesterday, and this morning we get 'news' that consumer spending 'unexpectedly stagnates'. One can only wonder for whom this was unexpected. With an unemployment rate of around 10%, what did they expect?

Bloomberg reports also personal income did not increase 'for the first time since September and the savings rate rose to a one-year high'.

"Demand may take time to improve as the unemployment rate hovers near a 26-year high, shaking confidence in the economic recovery. At the same time, Ben S. Bernanke yesterday said consumer spending, which accounts for about 70 percent of the economy, may “pick up” as wages rise."

“Consumers are still a bit cautious,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who forecast spending would be unchanged. “The biggest driver for spending is going to be jobs. You need stronger economic growth to generate job growth.”

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