Picture of the Day: Thanks a Lot, CNN. Now We're All Drunk.

One month ago, the crusty commentators at CNN complained that U.S. consumers were not "spending like drunken sailors," and hurting the economy as a result. Well, congratulations CNN. You finally got your wish. This morning, the Commerce Department's Bureau of Economic Analysis administered its monthly breathalyzer test to the U.S. economy. Result: We blew a "0.20."

Tripping over a 0.1% decline in real disposable personal income, consumers fell with wallets held open, spilling out a 0.2% rise in real spending. And with little cash left in our wallet's post-tumble, the national personal savings rate shed 0.3% -- down to 5.9%.

So for all the media pundits out there, mocking sober sailors with their stereotypes -- wake up! Because even when drunk, at least sailors returning to port are only spending their paychecks. American consumers, in contrast, are spending money we don't have ...

The government ate my paycheck
But here's the really interesting news: Even if we poor, weak-willed consumers are drunk, it's not entirely our fault. Somebody slipped us a mickey. You see, even as real disposable income declined, consumers thought they were doing just swell. Wages and salaries actually increased 0.3%, or half-again as much as the increase in spending, in July. It's just that between the effects of supposedly non-existent inflation, and supposedly low taxes, somewhere along the way, 0.3% of our national paycheck vanished.

So, the question becomes: How do we get our cash back? Since I write for an investing site, my advice probably won't surprise you: Invest in stocks. According to BEA, one of the few places consumers are still spending is in the auto sector, which accounted for half the increase in consumer spending last month. Sales are soaring at Ford (NYSE: F  ) , and at suppliers Johnson Controls (NYSE: JCI  ) , Lear (NYSE: LEA  ) , and American Axle (NYSE: AXL  ) .

Other "durable goods" industries are doing similarly well. For example, one big reason U.S. GDP took a hit last week is because we're importing lots of iPhones and big-screen TVs from abroad. Often, these goods are manufactured by U.S. companies -- Apple, obviously, and Corning (NYSE: GLW  ) , which dominates the market for LCD TV glass. But because they make them elsewhere, they hurt "GDP" when we import them back home. In contrast, you probably want to avoid clothiers like The Gap (NYSE: GPS  ) . BEA says spending on "non-durable" goods like clothing remains a weak spot in the economy.

If consumers are drunk ... investing in companies that profit from profligacy seems the only sober solution.

That's my take on BEA's latest facts and figures. But what do you think? Take the Foolish Rorschach test, and tell us what you see in the chart up above, below.

Apple and Ford Motor are Motley Fool Stock Advisor choices, but Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 30, 2010, at 6:46 PM, rd80 wrote:

    Consumers getting drunk. Buy Diageo!

  • Report this Comment On August 31, 2010, at 7:45 AM, rav55 wrote:

    HEY WAIT A MINUTE YOU GUYS AT THE FOOL DON'T GET IT BOTH WAYS!!

    John Rosevear here at the FOOL writes today:

    "Is this the double dip?

    Get ready for some ugly auto sales numbers: According to industry-watchers at both TrueCar.com and Edmunds.com, things are looking grim. TrueCar predicts that August U.S. light-vehicle sales will be down nearly 20% over last year's levels, a major reversal after months of year-over-year increases."

    Is John Rosevear just Chicken Little, is he trying to spread fear, uncertainty and doubt, or is somebody lying to us?

    So which is it? Are sales soaring or are sales in the toilet? You wouldn't be lying to us now would you Rich Smith?

    Or do you all just make this stuff up as you go along because you get paid by the word?

  • Report this Comment On August 31, 2010, at 11:03 AM, TMFDitty wrote:

    Answer: Sales may be *heading* for the toilet (or may not).

    What we know for certain though, is that in the most recent quarter, revenues at Ford and the auto parts suppliers named above were up double and triple digits, year over year. And BEA attributes half the rise in July spending to autos and auto parts.

    TMFDitty

  • Report this Comment On September 09, 2010, at 3:37 PM, j18a21g wrote:

    The Fool plays both sides. That is why their information is usually worthless.

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