The Great Recession was supposed to scar consumers for life and scare them into saving. Personally, I thought consumers might permanently change their behavior as they did after the Great Depression in the 1930s. But just as investor behavior is seemingly intractable, consumer spending behavior is hard to change. According to an article in the Washington Post:
Consumers spent more and saved less in January, according to government data released Monday, a sign that Americans feel increasingly secure about their financial situation, economists said. The growth in spending and the decline in savings were, respectively, more and less than analysts had predicted — adding weight to a growing consensus that consumers’ newfound frugality was just a fling.
Maybe consumers feel like the recession is over and they are willing to spend again. If so, most economists (again!) are going to be caught off guard.
Sectors catering to the consumer might perform more strongly than people expect. When I looked at our relative strength sector work yesterday, the biggest positive changes in RS over the last several weeks have come in healthcare, consumer staples, and consumer cyclicals. It’s impossible to know if the strength will be durable, but it’s certainly not what the consensus expected.
