Optimistic American Consumers Are Starting To Borrow Money Again
$MS
Morgan Stanley (NYSE:MS) cautions that while the American economy is self sustaining, the US consumer is starting to do dumb things with their money.
“Consumers are feeling pretty good, and they are starting to spend money again, and they’re starting to do dumb things. They’re starting to borrow money, they’re starting to maybe buy that house they shouldn’t or that car they shouldn’t,” said Mike Wilson, CIO, and head of research for Morgan Stanley Wealth Management.
Mr. Wilson said that the American consumer is feeling feisty since the labor market looks to be improving, and with lower gasoline prices, there is more disposable income for personal goals such as living on your own and starting a family.
“[Consumers are] going to spend that extra dollar because they’re feeling better. And now, the clock is ticking. We’re into the final part of this recovery. It could last three years, it could last five years, it could last two years, I don’t know. But that excess sort of behavior is starting to happen,” Wilson said.
In reality, Mr. Wilson and other Morgan Stanley officials countered, consumers really should globalize their portfolios by investing in Europe and Asian markets.
“For US investors, we have kind of had this nirvana period of free lunch in recent years,” said Lisa Shalett, head of investment and portfolio strategies for Morgan Stanley Wealth Management.
Mr. Wilson said European and Japanese markets should be top considerations for US investors. “International, developed markets are going to continue do better than U.S. markets on a relative basis,” he said.
“Japan looks a lot like the US companies in the 1980’s where there’s a lot of low-hanging fruit where they can generate earnings growth even with low economic growth because they have under managed their companies for so long. They are the worst managed companies in the world. But that is changing slowly,” he said.
The net worth of US households rose in Q-2 due to an increase in the value of homes and investments, a positive sign for future consumer spending.
The increase added $700-B to the total wealth of American families, putting it at a record high of $85.7-T, a report by the US Fed showed last Friday, but the buildup in wealth, has done little to boost the overall economy.
Economists hoped rising worth in American households could induce enough spending and confidence to bring about a more robust economic recovery. But economic growth has been anemic, and many households have seen little of this wealth flow into their paychecks.
Americans are slow to respond to the wealth effect, give them time..
Stay tuned…
HeffX-LTN
Paul Ebeling
The post Optimistic American Consumers Are Starting To Borrow Money Again appeared first on Live Trading News.