Spending

In spite of Obama throwing every constraint imaginable at the employer, in spite of doing all he can to discourage the consumer, the economy continues to exceed expectations. Today’s key Oct Retail Sales release printed + 1.2% vs expectations of +0.7%. Plus the past two months were revised higher. Retail Sales are still 1.8% below their Nov/07 peak but are 7.3% above their year ago level. Not bad, and in spite of our friend BO. Consumers are spending; they are less cautious. This speaks well for discretionary spending ahead.

We predicted earlier that economic vigor will blow through expectations, H1 11, that economists will continue to change their predictions, to revise those higher, ongoing. We know they will do that before they do.

Our prediction was made prior to the Rep sweep of Nov/2. There is some risk that the new Congress, in their enthusiasm for belt tightening, may retard growth. Some observers in fact predict a double-dip as a result. Nope. That won’t happen. There may be some slight dampening to vigor, but, short of a wild card event, our anchor will hold.

Robert Craven