What About the Economy?

I was listening to the radio just before my show began today and noted that it was reported that consumer spending was up over the last month. This came as a surprise to the "sky is falling" crowd that dominates the media today.

According to CNNMoney:

Retail sales unexpectedly rose 0.3% last month after a dismal December, the Commerce

Department said Wednesday, easing concerns that the U.S. already has fallen into a recession.
Wall Street cheered the report. The Nasdaq rose 2.3% while the S&P 500 and Dow climbed 1.4%.

Analysts had expected a 0.3% fall following December's 0.4% drop.

Consumer spending, which accounts for 70% of economic activity, is being eyed closely for signs the U.S. is sliding into a recession.

"As the consumer goes, so goes the economy," said Joel Naroff. chief economist at Naroff Economic Advisors. "The good news is that the consumer is not dramatically cutting back on spending, but the bad news is the consumer is not spending at any great pace."

The 1.4 percent increase in the Dow translated into 178.83 points. This is a significant increase for a single day.

The media is now trying to figure out what happened, considering the economy was suppose to be in a total melt down. I have been a contrarian for quite some time. The reality is, last month was the first one in which we actually showed the slightest sign of weakness outside of the subprime crisis. In spite of how great the passion to declare the end of the world, we might be seeing the end of a very short "recession." We will have to wait a while and see.

On a recent Movers and Shakers segment, I interviewed several Advisors from the Houston Business Show about the economy. I found the conversation most informative (click here and then click, Movers and Shakers).

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.