Economic Review

12/14/2009

Is the economy actually showing signs of life or is it just stubborn consumers determined to ring in a positive Christmas Holiday

Last weeks Retail Sales data surprised just about the entire market with a robust consumer spending pace while Unemployment dipped just a tad from horrific levels. And on a personal front, the Doc was quite impressed with the apparently exuberant level of consumer activity this past weekend in the Northeast. Malls were buzzing, restaurants packed and traffic wild and crazy as usual as Christmas quickly approaches. Then the idea actually crossed my mind. Despite the long term bearishness of macro level indicators, could the economy be experiencing a blip up? And the next question, which is more important….is it the mark of things to come?

The slight decline in last months unemployment rate is not really any surprise given the increase in demand for short term labor as a result of Christmas consumption patterns. Even the surprise in Retail activity could be explained away as cost conscious consumers began Christmas shopping early in pursuit of price discounts rather than waiting for the last minute. The real answer to the economic uptick lies in the next week or so as Christmas arrives and of course the post holiday season activities. US consumers are a determined bunch who would rather sacrifice consumption on post holiday essentials in order to enjoy the holiday season. Will this Christmas register perkier consumption compared to last year? Very likely as the abyss seems a little farther away than it was last year at this time. Is the economy really turning? Not likely, given the problematic reality in the housing industry and sticky unemployment.

But the real issue to focus on at this juncture is not consumption, but the spirit of the Christmas season. Focusing on the true meaning of Christmas and not getting caught up with consumerism is what the trend should be. Here’s an idea…instead of running around looking for yet another present that someone probably may not like…take the time to try and make someone’s Christmas a positive one through a nice gesture.

Stephan Kudyba (MBA, PhD) THE MARKET DOCTOR

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