Consumers are Back!

As I alluded in a previous post, the end of the earnings season, completion of elections, and general lack of noteworthy news caused the market to consolidate, and, in fact, decline slightly in the month of November.  This week, however, featured a number of economic headlines.  Here are the highlights:

• Online sales on Thanksgiving day rose 33% and 16% on Black Friday.
• Brick-and-mortar sales were also strong.
• Third quarter GDP was revised higher to 2.5% from previous estimate of 2%.
• Consumer confidence rose to 71.6%, which is the highest level since June. Consumers account for 70% of US economy, so together with strong start of holiday shopping season, this bodes well for the future.
• New unemployment claims declined to 407,000, lowest level in 2 years. Economists believe that in order to sustain GDP growth at 3%, new unemployment claims must drop to below 400,000, and we are very close to this level now.

Meanwhile, the market overcame Irish bailout news from Europe, and rallied strongly in the first day of December, wiping out all of November losses in one day.