Consumption represents ~70% of U.S. GDP – that’s why it was so important to put money in the hands of consumers via stimulus checks during the uncertainty of the pandemic.
We need people to exchange money throughout the economy – as soon as they get spooked and hold on to their money – the economy grinds to a halt and wealth disappears.
Tuesday’s Consumer Confidence Index surprised to the upside.
Many economists expected confidence to continue dropping with inflation across the full basket of goods and especially at the gas station.
This is where the “animal spirits” can trump the traditional equations – people were on lockdown and high alert for two years.
Now, they want to get out and spend money on restaurants, travel and other things that don’t involve sitting inside.
