For at least the past decade, anyone who has bet against the resiliency and
unending spending capacity of U.S. consumers has decidedly lost the wager. Even
through the recession of 2000-01, they hardly slowed their profligate ways; 9/11
managed to create a pause in spending…but it was more than made up for in the
ensuing quarters. Indeed, the careers of economists who have declared the U.S.
consumer to be tapped out litter the countryside like corpses after a
There are early signs, however, that taking the other side of this bet
is no longer a sure thing. We see a variety of factors suggesting that the
consumer, while not yet exhausted, is slowly but surely moving in that
direction. While it is premature to declare the American consumer "shopped out,"
I suspect it is now quite late in the cycle. Barring a significant improvement
in economic fortunes, including robust job creation and increased
personal-income levels, that exhaustion now looks all but inevitable.
the same economists telling us how much smaller energy is as a percentage of GDP
than in the 1970s, high energy prices still hurt spending. How bad are the gas
pains? Well, if the increase in drivers using credit cards to manage gas costs
is any indication, pretty bad.
MONDAY, September 5, 2005
INVESTORS’ SOAPBOX AM