The consumer is looking strong for May. Preliminary results from retailers are looking good. You can read the stats below.
I have had a theory about this whole situation. It goes something like this: The amount of people delinquent on their mortgage as a percentage is at its highest point in 30 years. I believe today we have the highest actual level of foreclosures, due to more homes today. Many of the home owners, who have given up on their home and selling in a short sale or going into foreclosure, simply are not making their monthly payment. I home owner with a $2,000 (for example) payment, where the new adjustment is now $2,800(for those with mortgages adjusting) stops making the mortgage payment. For 4 to 10 months they save $2,000(what they were paying). That in turn gives them $2,000 more to spend on groceries and gas and whatever. This is why our economy is only slowing and not dropping off a cliff, in my mind.
I was just in California, on the strip at Seal Beach I got my hair cut. My stylist had just sold his home in a short sale. His old payment was $3,000, he is renting in the same complex for $1,500. His rental unit is nicer than the one he owned. He is now saving $1,500 per month and since he is American, it will be spent!
Consumers Return to Malls in May
AP
Posted: 2008-06-05 11:02:53
NEW YORK (June 6) - U.S. consumers stepped up their shopping in May after tax rebate checks hit mailboxes, giving many of the nation's retailers stronger than expected sales for the month. Still, there were signs that many people are still focusing on necessities such as food and gas.
Discount and lower-priced stores such as
Costco Wholesale Corp. and
Wal-Mart Stores Inc. were again among the strongest performers. Analysts had predicted a gloomy May, with consumers contending with a rising cost of living, declining home values and tightening credit. However, according to a preliminary report from
Thomson Financial, of 27 retailers reporting, 13 beat expectations, 3 met expectations and 7 missed. Read the full article here:
http://money.aol.com/news/articles/shopping/_a/consumers-return-to-malls-in-may/20080605073909990001
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