Two contradictory reports seem to confuse the markets this past week. One showed that consumer confidence is way down, yet the other showed July retail sales jumping 0.5 %. The second report seem to shine a ray of hope on the abysmal state of the US economy, yet this ray of hope is nothing more than an illusion. Sales are up despite a lack of money and jobs, because the human psyche especially in America is to spend money when you don’t have it in order to feel like you have money. This has always been the case. At first consumers tighten up and then they let loose a little in order reconfirm their “stability.”
Consumer “malaise shopping” coupled with the vacation season has created an illusory statistic. If retail sales were truly expressing a positive trend then consumer confidence wouldn’t have plunged to 54.9 from 63.7 in July, the lowest its been in 3 decades. If consumer confidence remains low then relying consumers to lift retail numbers in the future seems to be a poor strategy to rely on.