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RedZonies

Arizona Conservatives

Consumer Confidence and Our Economy

Posted By on June 12, 2009

According to an article in Bloomberg, Confidence among U.S. consumers rose for a fourth straight month in June, reinforcing signs of an impending end to the recession, while prices of imported goods jumped as oil costs climbed.

The Reuters/University of Michigan preliminary index of consumer sentiment increased to 69, from 68.7 in May. The import-price index rose 1.3 percent in May, the most since July and in line with forecasts, a Labor Department report showed today in Washington.

The gain in confidence was less than economists had projected, and reflects a “dichotomy” between improving financial markets and the rising cost of gasoline, said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. The reemergence of commodity-price inflation threatens to stunt the economic recovery and constrain corporate-profit growth.

“Consumers are acknowledging some improvement is under way, but they’re not seeing a tremendous potential for upside in the economy,” said Stephen Gallagher, chief U.S. economist at Societe Generale in New York.

But I’m surprised that this confidence is postured as a sign “of impending end to the recession.” It shouldn’t change our expectations when we have oil prices going up, spending that pays back voters instead of spurring the economy, and an ugly forecast for high inflation caused by the outrageous growth of our national debt. No, whatever little “sign” we may see of hopefulness by consumers will not stop the economic consequences we will have to face, caused by this administration’s spending habits. Like the threesome, The Good, The Bad, and the Ugly: this Good sign will not offset the Bad economic decisions that have been made, which will lead to the very Ugly economic future we have staring us in the face.

 


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