Check out the euphoria surrounding the May retail sales data that's come out today. Apparently, retail sales came in double the expected amount. Double! Yes, that does sound impressive, as do statements like, "Americans spent twice as much as expected!" However, I have my doubts as to whether this says we're even close to out of the woods.
May retail sales increased 1%; stripping out gasoline spending, the increase was 0.8%, the heftiest increase in a year (a year with increasingly dismal consumer confidence). However, that figure includes the increasing impact of the government's economic stimulus rebates that have hit mailboxes and bank accounts in recent weeks; I apologize if this information doesn't really make me want to party yet.
A quick check of the site howispentmystimulus.com might also make you think. The purchases posted by different people include a new bicycle (the poster had ditched her car -- sorry, GM
There's been so much bad news lately, I can see why many people would be thrilled to get some better-than-expected data, but a dose of skepticism is in order. After all, Americans can't really help but spend when the prices of food and gas are going through the roof, and I'm sure some folks are taking the opportunity to buy some treats with their checks, since things have gotten so tight. However, the stimulus payments are just a short-term fix, not a cure for what ails this economy.
I can't help thinking that once those "stimulating" payments have filtered out of many consumers' bank accounts, it's going to be a long, hot, uncomfortable summer indeed. So don't throw any parties yet on the renewed strength of the American consumer.
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