The human capacity for self-delusion is limitless. Check this out:
People feel better about spending more even though they are demonstrably worse off:
Calling this cognitive dissonance would be too kind, for that would imply feelings of pain and confusion. Maybe wishful thinking or sleepwalking would be more appropriate terms.
This cannot continue indefinitely. American consumers will at some point acknowledge their inability to spend beyond their means. Equity values will adjust accordingly.
Confidence among U.S. consumers rose this month for a fourth straight time, reflecting signs that the worst recession in at least five decades may end this year.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 69, less than forecast while the highest level in nine months, from 68.7 in May.
People feel better about spending more even though they are demonstrably worse off:
U.S. household wealth fell in the first quarter by $1.3 trillion, extending the biggest slump on record, as home and stock prices dropped.
Net worth for households and non-profit groups decreased to $50.4 trillion, the lowest level since 2004, from $51.7 trillion in the fourth quarter, according to the Federal Reserve’s Flow of Funds report today. The government began keeping quarterly records in 1952.
Calling this cognitive dissonance would be too kind, for that would imply feelings of pain and confusion. Maybe wishful thinking or sleepwalking would be more appropriate terms.
This cannot continue indefinitely. American consumers will at some point acknowledge their inability to spend beyond their means. Equity values will adjust accordingly.
