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Wednesday, November 24, 2010

Consumer Impact Indicators

While some conservatives approach Thursday economic information from what can only be described as "bragging", there's always that voice in the back of me head that asks, "where were these masters of economic analysis when Bush was in office"?

True, the American economic recovery is sluggish - to put it as gently as one can - and the vast amount of Americans are having their perceptions distorted by theories and conspiratorial ramblings of conservatives that understand the modern economic landscape about as much as I understand how to re-slipper the valve plate on a drill pump. To put it another, more simpler, way - you really need to question the source of your economic information.

And while unemployment claims dropped and "durable goods" sales dropped - when leaving out the entire transportation sector - coupled with the decrease in sales of "new" homes, it wasn't all bad news.

Americans earned more and spent more last month, and the number of people applying for unemployment benefits dropped last week to the lowest level in more than two years. At the same time, demand for long-lasting manufactured goods and new homes fell off.

All told, the latest government data released the day before Thanksgiving suggest an improving picture of the economy. Income and spending are rising, and layoffs are slowing. This comes amid a decline in manufacturing activity, which had been a source of strength for months after the recession ended, and a struggling housing market.

Analysts question whether incomes can continue to grow at a consistent pace and keep consumers spending enough to invigorate the economy.

While I think it's a bit disingenuous to home in on one particular aspect of the broader economy in order to place blame for a problem or even use it as an excuse for policy that might not be as good for the country as you would want us to believe, the fact that incomes and spending by consumers are both increasing while lay-off are declining shouldn't be overlooked by anyone.

But when I hear about "new" home sales I think about fiscal responsibility. Are people opting to rent or purchase "pre-existing " homes? Are they staying in their current home in order to save money? On the same token, are companies opting to repair equipment rather than purchasing new? Again, it's a question of how are people saving their money and does that ultimately have a negative impact on the economy?

The answer is, I really don't know - though it does seem at least marginally plausible.

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