China is Happy!

It does not seem like much but the spending for this holiday season means alot to out economy short term

Despite consumer confidence in the U.S. being at its lowest level  since
March 2009, consumers opened up their wallets and took out their credit 
cards this Black Friday to the tune of $11.4 billion—the biggest
year-over-year  jump in consumer spending on Black Friday sales since
2007!

According to Chicago-based ShopperTrak, consumer spending on  this Black  Friday rose 6.6% from the same day in 2010. And online consumer spending jumped even more on Black Friday compared to last year—up 24%  according to a Coremetrics benchmark.

Why so much emphasis on Black Friday sales? The actions of  American  consumers make up for about 70% of U.S. gross domestic product. Consumer spending is not just important to American companies; it is of utmost importance to foreign countries. 

If consumer spending is rising sharply in the U.S., the manufacturing machine in China continues to roll, the fears of a China’s economy cooling too quickly subside, and  China continues to buy U.S. Treasuries. It’s all one  big cycle based on U.S. consumer spending.

But the million-dollar question remains: Are consumers out  shopping  because of pent-up demand or are the deals just too good to pass up?  And if those deals are too good, will deep discounts translate into profits  for  the big retail companies? 

The answer to this question won’t be known until retailers start reporting their fourth-quarter earnings some time in late January. For  now, American consumers are back in spending mode and that’s good news for America,  good news for the Chinese, good news for our stock markets!

By Michael Lombardi & Urban Playa

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