After the good consumer confidence numbers earlier this week, we got another nice dose out of the University of Michigan, which said that consumer sentiment had a nice bump up in May. 68.7! Awesome!
We don’t put much stock in the number since a) there’s a good chance it’s all being driven by the stock market and b) the only consumer sentiment that really matters is spending and they’re not doing that.
And as many folks like David Rosenberg have been arguing, the household deleveraging process is still only going in one direction. Releveraging is not in the cards, possibly for a long time, so consumers can take all the stock-market induced happy pills that they want, but it probably won’t get us far. (Plus, we think it’s kind of sick the way the media constantly tells people that it’s their duty to shop. Savings are pretty awesome in their own right and are needed for the investment that will power the future)
For a nice antidote to all the fluff about consumers getting more optimistic, NYT’s Michael Luo has a good profile of what normal Americans are actually up to these days.
Hint: It’s not spending more money
NYT: … before heading out recently to the discount grocery store that has become the family’s new lifeline, Sharon Ferrell checked her bank account balance one more time, dialling the toll-free number from memory.”Your available balance for withdrawal is, $490.40,” the disembodied electronic voice informed her.
Among the Ferrell’s other changes: Fewer haircuts for the kids and a greater use of coupons when buying meat at the grocery store. And this isn’t even a family that lost work, just one that’s gotten smartly rational about spending. Read the whole story, which is excellent. It’s playing out all over the place.