A-Team leader Hannibal Smith used to quip: "I love it when a plan comes together." And it seems investors are pretty pleased by perfect alignment as well.
Last week, the U.S. Bureau of Economic Analysis released its latest report on income and spending trends in America, and the picture couldn't have looked prettier. For the second time in three months, America's consumers proved frugal in moderation and rich in common sense -- earning more than they had in the previous month, and spending only a skosh more than they took in:
As I gaze upon this picture of October's near-perfect alignment between income and spending, I imagine Ben Bernanke, beaming beatifically in approval. "Ah," he sighs. "My dreams of modest-but-not-exorbitant inflation are all coming true."
Real disposable income inched up 0.3%, right along with real consumer spending. And as we head toward the Christmas selling season, consumers will have more money in their pockets to spend at stores like Best Buy
Oil smudges a pretty picture
But is this picture really as pretty as it seems? I mean, yes, October worked out well. Yet overall, in all four months depicted, consumers spent more than they earned. The gap between income and spending was smaller in some months than others, but in each and every month, there was still a gap.
Call me crazy, call me a Fool, but I think I've spotted what's causing that gap -- that innocuous-seeming caveat in the BEA report: Prices were flat ... "excluding food and energy."
Higher prices for food and energy may warm the heart-cockles of executives at Monsanto
Bulls hail the return of the rational consumer, earning and spending in equal measure. But if bread, butter, and gasoline suck up too much of that spending, retailers of other wares will feel the pinch. Just something to think about, as you digest your Thanksgiving day turkey.
That's my take on BEA's latest facts and figures. But what do you think? Take the Foolish Rorschach test, and use the comments section below to tell your fellow Fools what you see in the chart up above.
Best Buy is a Motley Fool Inside Value recommendation. Best Buy is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended buying calls on Best Buy. Motley Fool Options has recommended a synthetic long position on Monsanto. The Fool owns shares of Best Buy and ExxonMobil.
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