Income Pie Implications
Posted on Tuesday, May 13th, 2008 | In Current Market News, Stocks to WatchThe NY Times came up with a very interesting way to look at consumer spending. In the long run, consumer spending is a function of consumer income. Though since early 2000 it did not appear to be the case as consumers financed their spending by borrowing against their future income. If you believe that consumer spending is likely to stagnate but the cost of food, healthcare and energy is likely to increase (it did in 2007), then something has got to give.
In other words the income pie is not growing; some slices are expanding at the expense of “X.” And that is the question that this NY Times diagram may help to answer: at the expense of what?
Several categories come to mind right away: new car sales – yes we will be driving older cars (maybe we should look to used car or auto parts stores). We’ll be eating out less which will likely impact the full service restaurants by a large degree. Fast food may get hurt by this trend as well but at the same time, some may chose to downgrade to fast food from full service restaurants. In regards to travel, the vacation homes and hotels are likely to be another casualty.
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auto parts stores, Consumer Spending, cost of food, Current Market News, new car sales, ny times, service restaurants, Stocks to Watch
 About Vitaliy Katsenelson (http://contrarianedge.com)
VITALIY N. KATSENELSON, CFA, has been involved with the investment industry since 1994. He is a portfolio manager with Investment Management Associates, where he comanages institutional and personal assets utilizing fundamental analysis. He is also an adjunct faculty member at the University of Colorado at Denver, Graduate School of Business where he teaches Practical Equity Analysis and Portfolio Management class. He wrote a book Active Value Investing: Making Money in Range-Bound Markets published by John Wiley & Sons in September 2007. Katsenelson is a regular contributor to the Financial Times, MarketWatch from Dow Jones, and Minyanville.com. This website contains articles Katsenelson wrote over the years for afformentioned publications (and TheStreet.com, RealMoney.com, The Motley Fool), as well as some more exclusive content. Look here for high-quality analysis and thoughtful, detailed, and complete articles on a number of issues involved in investing. He is a CFA charter holder, member of CFA Institute, has served on the boards of the CFA Society of Colorado, and is currently on the board of the Retirement Investment Institute. Katsenelson received both his bachelor of science and his master of science in finance from the University of Colorado at Denver, where he graduated cum laude. |
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