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Food For Thought

May 11, 2011 – 4:53 pm

We all know the consumer is about 70% of our economy’s strength. If the consumer does not spend, our economy shrinks. Retail sales are the gauge we use to examine what the consumer does with his or her paycheck. In recent months retail sales have been fairly robust. It could be stronger as the consumers deal with debt and a poor employment environment but most experts feel the consumer has been very consistent in their spending.

Now, let’s turn to consumer confidence that has fallen sharply in March and April. The reasons could be because of the earthquake and then tidal wave in Japan or the weakening in some economic numbers in the first quarter. till consumer spending held up well. You could argue that consumer confidence numbers do not really reflect what the consumer actually does, just what he feels.

What would happen if the consumer regains confidence while at the same time we keep adding jobs to our economy? We added 200,000 in March and April may well give us 300,000 more. If spending picks up into
the summer months that will lead to better corporate earnings. At the same time we have seen oil prices, the bane of all consumers, finally begin to fall.

Things are looking up.

Good Trading
Steve Peasley

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