The next big shopping season is back to school shopping and that will tell us to what extent consumer spending is going to rebound. Should be no surprise that there were a lot less people driving in July than usual, both because of the stay cation trend and the high unemployment. Add that to lower gasoline prices and July was a bit slower than predicted.
The economy is near the bottom and lagging indicators are still going to look bad. We know that people who got into trouble on their mortgages six month ago are just now likely to be going into foreclosure. We know businesses are still reluctant to hire and are in fact still letting people go in order to maintain earnings on lower spending. However we do not consumer confidence has an upturn, more houses are being sold at very affordable prices and industries are starting to rebuild inventories cautiously.
Companies have cut to levels that provide earning even in our contracted economy. As back to school spending gets rolling, we may see the teenagers lead the consumer spending rebound.
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