We noted mid-Oct that the error to the consensus forecast for the US economy was a significant under-estimation of vigor, especially payrolls and related consumer spending, and especially spending on discretionary items. That is, the Wall St. forecasting crowd were all looking in the wrong direction.
We then reminded readers on Nov/9 - If we are right, discretionary spending will expand. Those whose income is linked to this sector may at this time purchase a case of medium-priced champagne, to be traded for the finer stuff perhaps once odds approach 85%.
Recent data has cooperated. Those who have found themselves gasping for oxygen past year, may now make the trade.
Look for economists to continue to revise their forecasts higher.
We will have Chain Store sales result for Nov., this Thursday (Dec/2), followed by the key employment report for Nov., on Friday (Dec/3). Look for these releases to cooperate, broaching expectations.
We also know now that retail activity for the Nov/26-30 period blew through forecasts. Thank you very much.
Business planners should not calculate for more of the same for H1, 2011. That warehouse, just too expensive, about to be sold? Don’t. Not yet. About to release another 20% of staff? Wait until after Christmas, then take a look.
Robert Craven
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