Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

How You Can Profit From the Return of the American Consumer

Companies / Sector Analysis Dec 05, 2010 - 05:49 AM GMT

By: Investment_U

Companies

Best Financial Markets Analysis ArticleDavid Fessler writes: It didn’t take a genius to see how the situation would unfold…

Towards the end of 2009, with the U.S. economy mired in a deep recession, hundreds of thousands of people losing their jobs, and many consumers counting the cost of excessive spending, the shift began.


Americans collectively sucked in their fat bellies and tightened their financial belts.

It was a good move for them… but disastrous for the U.S. economy.

I detailed this change in September 2009, with an article entitled: “The Paradox of Thrift: How a Better Savings Rate is Fueling the Recession.”

To combat the spending slowdown, the Federal Reserve swung into action. It suggested that the only way to kickstart the economy was to fill the money “vacuum” by replacing it with some other money source.

We all know what happened next. The Fed printed trillions of dollars and gave birth to “Quantitative Easing.” And it’s since had an offspring – “QE2.”

And throughout it all, Americans have quietly saved more money and paid down credit card and mortgage debt.

The question is: What does this mean for the U.S. economy, now that we’re into one of the most crucial periods of the year?

Consumers Stash the Cash

I recently spoke with a friend of mine, who’s the president of a local bank. She said that for the past two years, consumers have shuffled their cash into savings and lowered their debts. She told me that her bank is seeing fewer loan defaults, too.

But has nearly three years of consumer thrift made a meaningful difference? The current figures on loan loss reserves would seem to indicate so.

As you can see in the data from the St. Louis Federal Reserve Bank, loss reserves peaked at $3.73 billion in late 2009 and early 2010 and have dropped steadily ever since. They currently sit at around $3.46 billion, down just over 7%.

Translation? Americans are faring better financially. According to the Federal Reserve Bank of New York, total consumer debt has fallen by nearly $1 trillion since late 2009 to $11.58 trillion.

Consumer confidence is slowly returning, too. People are starting to spend again, providing a much-needed boost for the economy. And that’s good news for one sector in particular…

Holiday Season Cheer for America’s Retailers

It’s widely accepted that consumer spending accounts for over 70% of U.S. GDP. And with the holiday spending season upon us, news of Americans’ improved financial health couldn’t come at a better time for the nation’s retailers.

Speaking to Time, Kathy Grannis of the National Retail Federation commented on the recent Black Friday sales: “There were bargain-hungry shoppers and retailers really did pull out all the stops for people.”

Initial results seem to indicate shoppers were out in force and that the overall numbers were up from last year.

While some of the big box stores like Wal-Mart (NYSE: WMT) were open earlier than last year, online shopping was also up, which bodes well for companies like Amazon (Nasdaq: AMZN) and eBay (Nasdaq: EBAY).

These stocks offer a way to play a potential uptick in consumer spending this holiday season and the fact that consumers are improving their finances is cause for cautious optimism as we head into what could be a more robust 2011.

Good investing,

Source: http://www.investmentu.com/2010/December/profit-from-the-return-of-the-american-consumer.html

by David Fessler, Advisory Panelist, Investment U

http://www.investmentu.com

Copyright © 1999 - 2008 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules