Investment Contrarians Expert Reports: Retail Sector’s Holiday Shopping Season Will Be Weak Despite Easy Money from the Federal Reserve

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In a recent Investment Contrarians article, editor and financial expert George Leong reports that a lot of retailers are betting on a strong holiday shopping season, driven by the easy money the Federal Reserve has in place for consumer spending. But, Leong believes that with slowing gross domestic product (GDP) growth and a decline in durable goods orders, the uncertainty of the upcoming “fiscal cliff” is impacting the spending habits of consumers, who are capping their spending—which, he notes, doesn’t bode well for the retail sector.

Investment Contrarians Expert Reports: Retail Sector’s Holiday Shopping Season Will Be Weak Despite Easy Money from the Federal Reserve

Investment Contrarians Expert Reports: Retail Sector’s Holiday Shopping Season Will Be Weak Despite Easy Money from the Federal Reserve

Leong reports that the second-quarter GDP (third estimate) reflected the current stalling in U.S. consumer spending, as the GDP growth of 1.3% was well below the estimate of 1.7%.

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In a recent Investment Contrarians article, editor and financial expert George Leong reports that a lot of retailers are betting on a strong holiday shopping season, driven by the easy money the Federal Reserve has in place for consumer spending. But, Leong believes that with slowing gross domestic product (GDP) growth and a decline in durable goods orders, the uncertainty of the upcoming “fiscal cliff” is impacting the spending habits of consumers, who are capping their spending—which, he notes, doesn’t bode well for the retail sector.

Leong reports that the second-quarter GDP (third estimate) reflected the current stalling in U.S. consumer spending, as the GDP growth of 1.3% was well below the estimate of 1.7%. (Source: “Economic Calendar,” Yahoo! Finance.)

Given this, Leong wonders about the underlying strength of the consumer spending.

“The retail sector is showing improvement in sales,” says Leong, “but consumer spending on durable goods was horrible in August, when spending on non-essential goods, and services cratered 13.2%.” (Source: U.S. Census Bureau News, U.S. Department of Commerce, September 27, 2012.)

Leong states that the poor reading indicates hesitancy in consumer spending in the retail sector on non-essential goods and services that, in his view, is a key component of a healthy and growing economy. When consumers refrain from buying non-essential goods and services, it shows a lack of confidence in the economy, thereby impacting consumer spending in the retail sector, reasons Leong.

“A strong fourth-quarter for the retail sector could boost the country’s gross domestic product (GDP) growth, since consumer spending accounts for about 70% of the GDP… Yet until the country’s jobs growth rises and the unemployment rate falls…consumers will remain hesitant; this will impact retail sector sales and the economy as a whole,” concludes Leong.

To see the full article, and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.

Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.

After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.

Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.

Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.

George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.

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