Tuesday, January 15, 2013

Economy: In Consumers We Trust 2013

This morning we got news that U.S. retail sales rose 0.5% in December, more than the experts had expected (marketwatch). Excluding gas stations, where lower fuel prices reduced expenditures,  retail sales increased 0.8%.

The solid retail numbers confirm that the consumer spending, the engine of the economy (around 70%), is still alive and kicking. US consumers are still optimistic in spite of all the fear mongering in the media. They even ignored the fiscal cliff hype which ruled the news channels last month.

The robustness of consumer spending is really impressive and encouraging. It seems that consumers care more about their real economic situation than the - usually gloomy - headlines in the media.

And the real situation of US consumers is getting better thanks to the healing job market, the up-ward trend on the stock market and the recovering housing market. All these trends are raising the wealth of the consumers, allowing them to improve their life standard by spending more money. Hence there is a high probability that the growth of the consumer spending - and therefore the expansion of the whole economy - will continue leading to further gains on the stock market.

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