Get ready to fly boys and girls

Regardless of if the actions of the President and Congress are the best thing for the country what it will do is put the final shot in the arm to consumer confidence.

Get ready for a crazy year folks. We are all ready seeing futures take off (i.e. rising fuel prices) and stocks related to consumer confidence are moving up.

This year we saw many tight markets. Capacity hasn't increased significantly but demand has.

Everyone likes to compare our market to 2006 because that was the high water mark. Towards the end of last year capacity was just at 2006 levels but demand was higher. Not because per capita was equal or income was equal but because of all the efficiencies that are now built into the market. In 2006 while a store was selling more widgets than in 2012, capacity demands was equal because inventory levels have been severally reduced. In many cases it was measured in weeks and now in days. In the auto industry it is measured in hours and in some cases they are pulling parts off a trailer and taking it to an assembly line.

Demand has been tamped down by consumer confidence. With the expectation that consumer confidence is going up we will also see demand increase. This will bring inflation, higher fuel prices, higher interest rates, shortages of items AND a capacity shortage.

It is going to be an interesting year to say the least.

 

First, we are talking about consumer confidence. Not challenges of the economy. And the main factor that have kept people in a holding pattern has been what is going to happen with taxes. They care about spending and want to see it curbed but what was holding most back was not know what was happening with taxes.

But also the next battle is spending. But unlike taxes most Americans won't feel the spending cuts immediately if they go into effect.

And hopefully debt ceiling will give some pause. We are going to need something to hold back inflation.

 

Consumer confidence is not about math and formulas but about soft, gooey, fuzzy logic. We have likely all said "the worst part is not knowing" and that is what has been happening regarding taxes. People now know and the fear is removed. If you look at past reports and spending habits there are many people that have expendable income and have been paying down debt and saving. And the really sad part is while most of these people need to keep doing this they have indicated once we settle the tax issue they would likely start spending. And nothing mentioned about resolving one way or the other just resolve it.

That $100 is an average so the people that it is going to hurt are the ones that will see a $20 increase. But they are not the people that have extra to spend.

 

Please post the link to that article if you can find it. I was watching Fox Business this morning and they had people saying the opposite. Not that I put a lot of stock in talking heads or general press. I like to look at the reports by people that don't get paid by advertising dollars.

 

Truck drivers have to be the most pessimistic group I have ever seen.