Wednesday, October 31, 2007

The Consumer Paradox

The consumer is telling us two very different things

Results for credit card companies like Mastercard (MA) and American Express (AXP), both of whom saw significant increases in card transaction would lead you to believe the consumer is healthy and strong. \A historically low unemployment rate and a strong job market would push one to be in the "thing are good" camp, correct? The recently released Q3 GDP that saw the US economy grow at the fastest rate in nearly two year would most likely lead you to believe things are just going to get better down the road.

So, if all that is true, then why is consumer confidence falling? Is it that the consumer thinks the good life just cannot continue or that they just do not realize how good thing actually are now? Could it be uncertainty over the elections next year? Is the fact that whenever congress talk about taxes the consumer get nervous? Is everyone worried about the value of their home, even if they are not selling?

I do not know the answer but this is clear, what the consumer says and what the consumer is doing are two very different things. Maybe it is a "never believe polls" thing?

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