...for revenues to match that cost savings would require consumer spending, now shrinking by 0.3% from last year, to climb more than 3%. Which obviously would be quite a feat, given 10% unemployment, a reluctance by John and Jane Q. to go deeper into hock and the fact that rising food and energy prices are gobbling up a near- record slice of household budgets. Despite such daunting numbers...consumer stocks are red-hot, up some 77% from their lows.
... perhaps the bulls are counting on the public sector to replace vanishing labor income in the private sector. That might not seem such a wild hope at first glance, since government has been the one and only source of job creation over the past decade. In contrast to the private sector, which has shed 588,000 during this stretch, it swelled the ranks of the gainfully employed by a cool two million.
Trouble is...1.95 million of those two million slots were filled by state and local governments. And with their tax receipts suffering a steep decline, they don't have the scratch to go on a hiring binge. Indeed, the state and local combo had to shave 179,000 workers over the past 12 months.
---via Alan Abelson, Barrons, 10.26
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