January’s auto sales were a huge jump from sales a year ago (during the Polar Vortex) and suggest that the consumer is far from dead — in fact, we all seem to be spending our extra money on big-ticket items. The U.S. Big Three had a huge month, and when cars and trucks are selling, that means jobs, jobs, jobs.
It takes jobs to make these trucks and it takes jobs to earn enough money to buy these trucks. In fact, last week’s unemployment claims numbers continue to show an economy that is producing jobs for almost everyone who wants one. Before that, one Federal Reserve governor said that he thinks our unemployment rate, currently at 5.7%, will drop below 5% before the year is out.
Consumers are making a bit more, and they’re spending a bit less, or at least that’s what the data showed for December. But one month’s data doesn’t mean a whole lot, particularly when it comes around the traditional holiday shopping season, or more likely, the post-shopping season.
Also, don’t forget that lower gasoline prices and lower home-heating prices can account for lower spending, as well.
The markets have become schizophrenic, to say the least, as volatility has moved higher, and many journalists and pundits are looking for ways to either explain the moves or simply to keep investors interested in the day-to-day machinations that really aren’t even relevant for investors like you and me.
It’s volatility, plain and simple, and it’s normal. As I’ve repeatedly said, “Get used to it.”
Heck, Greece better get used to it. The market in Greece jumped more than 11% last week as bank stocks soared. Why? Well, the latest words out of the new, leftist government are a bit more docile, talking of working with the European Union to keep Greece in the fold and working out its debt issues.
Then, of course, the EU had its say and the Greek market took a 3.4% drop followed by a 2% drop at the end of last week. Prepare for more tumult in the weeks ahead.
Coming back Stateside, do you remember Dr. Gloom, better-known to some as New York University’s hot tub professor, Nouriel Roubini, who’s as famous for his hot tub frolics as with having predicted something like eight of the last two recessions?
Now Roubini is taking other pundits to task in an article he’s written about the failures of doom-and-gloomers to grasp what’s really driving slow growth. Funny, but he’s the ultimate doom-and-gloomer who failed to grasp that the economy and markets would continue to expand.
It’s amazing how often he seems to reinvent himself. Unfortunately, Roubini still commands a large audience — hopefully, that will change over time.
Daniel P. Wiener is editor of The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds.
