THURSDAY OCTOBER 8, 2009

Reason for Optimism

Retail sales came in better than expected (they were actually positive!) and have given the markets some optimism.  The strong report certainly surprised those in the consumer is dead crowd.  Could it be that the consumer is beginning to awaken from their crisis induced slumber?

Many believe that the consumer is dead due to the high unemployment rate and drop in consumer credit.  There is no questioning that high unemployment will weigh on the consumer.  In the face of these numbers, many are forecasting a weak Christmas selling season.  However, these numbers are backward looking.  The important question is what is the consumer thinking about the future.  Can the consumer possibly be feeling worse than they were at this time last year?  At this time last year, the consumer was right in the middle of a scary economic crisis with no end in sight.  They had no no idea of how bad it could get, and it certainly did get bad!  They understandably closed their wallets.  However, relative to last year, how can the consumer not feel more optimistic today? The economic picture, albeit still weak, is clearly an improving one.  Today's retail sales numbers are yet another positive economic statistic suggesting an improving economy.  Going forward, the comparisons, both in terms of the consumer expectations and corporate earnings (ALCOA reported a positive earnings surprise last night), will be easier and should provide some positive headlines for the markets.  Maybe this is a reason for optimism.

POSTED AT 1899-12-30 09:35:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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