If you’ve been worried about the U.S. consumer’s comeback, Societe Generale’s Brian Jones says its now safe to be a bit more bullish on their prospects.
There’s several reasons for this according to Jones:
- Job losses have been in decline since August 2010
- Job openings are rising, now up to 3.2 million
- Unemployment insurance is extended through the end of 2011, for those who can’t take advantage of the job market
- Dividend and interest payments are up to $62 billion since September annualized
- The 2 percentage point cut in social security contributions puts and additional $105 billion in consumer pockets
- As of September, consumers net financial assets are up 24%
So, more people have jobs, more people have more money in their paychecks, and more people’s portfolios are in better shape. So, it’s easy to think people will spend more money, right?
Not so fast says Jones:
Consumers’ actions also provide some insight into the health of that sector. The nominal value of consumer credit outstanding contracted by a hefty $187.2 billion between July 2008 and last September. While the $17.7- billion increase over the four months through January reversed a mere fraction of that decline, it does suggest that consumers are more confident in taking on debt. A breakout in closely followed confidence measures from recent ranges would provide a signal that all is decidedly recent ranges would provide a signal that all is decidedly.
The credit comeback has yet to really materialise, but so long a number’s like today’s initial jobless claims continue to indicate strength, wages and in turn credit should grow too.
Photo: Societe Generale