It's A Deal

November 26, 2007

‘A Lot’ To Worry About?

There are some days when I honestly believe there are two things in this world that will never die: cockroaches, and the US consumer. (Yes, these are in fact two different animals, though some shoppers can often be mistaken for their smaller brethren.)

Every bet on the demise of the consumer over the past 10 years or so has been a loser, and as the holiday shopping season really picks up steam, there will be no shortage of naysayers, especially this year. Maybe those prognosticators will be right this time around – and if so, they will no doubt act as if their previous 12 wildly inaccurate projections never happened.

UBS just came out with its latest monthly survey on investor optimism, and there just may be a hint as to why we continue to shop ‘til we drop. (On a personal note, I can say with great satisfaction that I have little to do with this shopping phenomenon, except in the all important liquor store/golf store category. A trip to the dentist for a routine mouth rebuilding would be preferable to me than 15 minutes at a mall.)

At any rate, UBS’ survey tells a fairly grim tale. The main index of optimism shed 26 points, to 44; optimism about personal investment portfolios slipped 6 points, to 56; and a host of other indicators relating to the credit crunch and real estate also fell. As an aside, according to this poll, 47% of the folks surveyed – that is, your average investor – said they believe the falling value of the dollar is hurting the current investment climate “a lot.” Asked to explain themselves further, all 47% hung up. (OK, that last part may not be true, but it would have been fun to try it.)

However, as we’ve mentioned, these shoppers are a resilient lot, and here is why we’re safe. Four out of five respondents said the US in a slowdown or even in a recession. So guess how many of the same folks plan to spend less on holiday gift than last year? Just 30%. So, the recession may be at hand, but we can’t be expected to worry about that when so many of us are out spending more money than we did last year.

Tough times indeed.