Philly Fed Prez Plosser: Consumer Spending, Exports Are Cause for Optimism

By: Paul Kasriel | Fri, Jul 13, 2007
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Really? Light motor vehicle sales down for six consecutive months (see Chart 1) is cause for consumer spending optimism? Bed Bath & Beyond, Best Buy, Circuit City, Sears Holdings, Home Depot and West Marine recently issuing profit warnings are a cause for consumer spending optimism? Downward trending year-over-year changes in nominal same-store national chain retail sales (see Chart 2) are a cause for consumer spending optimism? Downward trending consumer sentiment (see Chart 3) is a cause for consumer spending optimism? Near record household debt service burdens (see Chart 4) with billions of dollars of adjustable rate mortgages due to rest higher in the coming 12 months are a cause for consumer spending optimism? Falling house prices and slowing active mortgage equity withdrawal (see Chart 5) are a cause for consumer optimism? Near record low household liquidity (see Chart 6) at a time of near record household leverage (see Chart 7) is a cause for consumer spending optimism? If these are causes for optimism, President Plosser, I would hate to see pessimism!

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Paul Kasriel

Author: Paul Kasriel

Paul L. Kasriel
Director of Economic Research
The Northern Trust Company
Economic Research Department
Positive Economic Commentary
"The economics of what is, rather than what you might like it to be."
50 South LaSalle Street, Chicago, Illinois 60675

Paul Kasriel

Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005. The accuracy of Paul's 2008 economic forecast was ranked in the top five of The Wall Street Journal survey panel of economists. In January 2009, The Wall Street Journal and Forbes cited Paul as one of the few who identified early on the formation of the housing bubble and foresaw the economic and financial market havoc that would ensue after the bubble inevitably burst. Through written commentaries containing his straightforward and often nonconsensus analysis of economic and financial market issues, Paul has developed a loyal following in the financial community. The Northern's economic website was listed as one of the top ten most interesting by The Wall Street Journal. Paul is the co-author of a book entitled Seven Indicators That Move Markets.

Paul began his career as a research economist at the Federal Reserve Bank of Chicago. He has taught courses in finance at the DePaul University Kellstadt Graduate School of Business and at the Northwestern University Kellogg Graduate School of Management. Paul serves on the Economic Advisory Committee of the American Bankers Association.

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