
News from colleagues and clients is reinforcing our view that while select goods-oriented companies have noted slowing sales and rising inventories, overall spending trends remain positive as the consumer shifts preferences from goods to services.
We’ve heard of the worst traffic in years and miles of backups to vacation destinations despite the high gasoline prices.
We’ve heard of restaurants at full capacity and struggling to obtain reservations that aren’t made well in advance.
And we’ve heard of car rental companies canceling requests on the day of travel due to no cars being available.
With the consumer being the biggest driver of economic growth (~70% of GDP) and services representing a larger portion of spend than goods, it is difficult to envision a recession in this environment.
We are not saying that this type of spending will last indefinitely, but the willingness and ability to spend by consumers suggests that we are not in a recession now. However, we will need to keep a close eye on these spending patterns as we go into the fall and the ever-important back-to-school and start of the holiday shopping seasons.
Michael Minter, managing partner of Mintco Financial, www.MintcoFinancial.com
Call 813-964-7100