Back in the Dark Ages, there was a TV commercial for Timex watches that said "it takes a licking but keeps on ticking." That came to mind Tuesday morning when I heard the latest consumer confidence numbers. Since consumer spending is two-thirds of GDP, it is important to see how confident they are and whether they will increase or decrease their spending.
Confidence increased 7.2 points to 76.2 last month, which is the highest in the four years since the recession ended. And, it comes on the heels of a 7.1 percent increase the previous month. That's a whopping 23% increase in two months and suggests many bullish things. But, what could cause such a huge increase in confidence?
Clearly, the economy is not 23% better. Sadly, our leaders are not 23% better. The stock market is up but certainly not 23%. Maybe, the weather is 23% better, but I don't think that matters quite so much.
I suspect it is the continual Chinese water-torture of bad news that has moved into the distance. Americans may be realizing the sky did not fall after the Congressional fiasco at year-end. The day after sequestration, breakfast was on the table, just like normal. And, Europe did not implode from the Greek or Cypriot problems. China has neither collapsed nor declared war on anybody. As I've said so many times, the stock market hates uncertainty, and uncertainty seems to be reduced. This lack of bad news reduces uncertainty.
Of course, we can always worry (and usually do) that this is just the calm before the storm, that we have become sanguine simply due to the lack of bad news -- that something bad is really about to happen. But, when is that not the case? Is there anybody who doesn't know there are always bad things in the future?
Many observers have remarked upon the optimistic can-do attitude of Americans. It only takes a lack of bad news to get our juices flowing again! You know, I really like Americans . . . they keep on ticking . . . and spending . . . thank God!
Confidence increased 7.2 points to 76.2 last month, which is the highest in the four years since the recession ended. And, it comes on the heels of a 7.1 percent increase the previous month. That's a whopping 23% increase in two months and suggests many bullish things. But, what could cause such a huge increase in confidence?
Clearly, the economy is not 23% better. Sadly, our leaders are not 23% better. The stock market is up but certainly not 23%. Maybe, the weather is 23% better, but I don't think that matters quite so much.
I suspect it is the continual Chinese water-torture of bad news that has moved into the distance. Americans may be realizing the sky did not fall after the Congressional fiasco at year-end. The day after sequestration, breakfast was on the table, just like normal. And, Europe did not implode from the Greek or Cypriot problems. China has neither collapsed nor declared war on anybody. As I've said so many times, the stock market hates uncertainty, and uncertainty seems to be reduced. This lack of bad news reduces uncertainty.
Of course, we can always worry (and usually do) that this is just the calm before the storm, that we have become sanguine simply due to the lack of bad news -- that something bad is really about to happen. But, when is that not the case? Is there anybody who doesn't know there are always bad things in the future?
Many observers have remarked upon the optimistic can-do attitude of Americans. It only takes a lack of bad news to get our juices flowing again! You know, I really like Americans . . . they keep on ticking . . . and spending . . . thank God!
