A view on consumer spending

Dear Reader,

At this rate I should call the blog "long term macro forecasting!"

However, I continously receive questions involving macro issues rather than issues such as the ridiculous price Debenhams stock is currently trading at (a topic less interesting for most people).

Though I feel I have more skill in the latter topic than the former, I shall in this particular blog focus on the statement even fellow investment advisors I work with have been saying over the last year: the consumer will push the economy forward soon.

Who am I to say otherwise, but I feel they are more likely to be wrong than right. As far as I am concerned there are three prinicipal factors that allow the consumer to maintain and increase spending. They are:-

1. Increasing wages
2. Increasing availability to credit
3. Increasing asset prices


Who wants to take bets on any of these increasing? I wouldn´t. Consumer spending will not grow strongly. As a result in most developed countries economic growth will be weaker than expected.


Yours sincerely,

Alessandro Sajwani