Transcripts

"Two Ways to Play" -Kevin Depew of Minyanville

SUSIE GHARIB: So can the consumer help pull this economy out of recession and into recovery? Tonight's "Two Ways to Play" takes a look. Here's Kevin Depew of Minyanville and Minyanville's Kevin Depew.

KEVIN DEPEW, EXECUTIVE EDITOR, MINYANVILLE, COM: It's only September, but pretty soon we're going to be inundated with gloom and doom about the upcoming holiday shopping season. A desperately weak consumer is now a foregone conclusion and for that reason alone bears might want to consider a more optimistic outcome. The idea that the U.S. consumer must retrench due to high debt levels is simply false. Let's look at the real numbers. Thirty percent of consumers have no debt whatsoever. Forty to 50 percent have reasonable debt levels. That leaves just 20 to 30 percent that have gotten into trouble. If the other 70 percent to 80 percent are able to spend and consumers prove more resilient than expected, look out above. Consumer credit for July released this week showed an unprecedented decline in credit demand. Consumer credit has now declined for six consecutive months and is falling at the fastest rate since 1944. Why is this important? Two reasons: first, it shows the extent to which consumers feel like they need to repair the household balance sheet, which is going to pressure consumer spending for the critical holiday season. Second, virtually all government attempts to re-ignite the credit boom ultimately depend on consumer demand for credit. If nothing else, I admire the optimism, but the numbers just don't agree with your view.