269. Is This Too Good to be True?

As we continue to see stimulus money artificially project a good economy, some reporters continue to run with the herd rather than calling the hard facts. As I read this article I questioned the long-term benefits of the news I was reading. The end of the article brought the real picture back in focus. This is an article about the good, bad, and the ugly. I found it humorous that some reporters were marching in a parade with banners flying high celebrating the increase in consumer spending chanting "more to come, more to come." If you look at the dollars being spent I couldn't agree more; but, if you look at the number of products being sold I would think you might see no growth. Just yesterday we went "discount shopping" at the Wal-Mart Superstore. We just needed a few items, like cereal, cranberry sauce and sherbet. The wife keeps a log of the last two prices for each of the groceries and wasn't shocked that once again Wal-Mart raised the prices. Cereal from $1.96 to $2.50, cranberry sauce from $0.88 to $1.32 AND 2 ounces less and Sherbet from $2.00 to $2.50 AND 16 ounces less. Add bell peppers from $0.50 to 0.98 and can vegetables up 25% overall and you can see we have no choice to spend more! Shop at a different store and you will see even higher increases. How much longer will this continue before people stop buying things or simply can't afford them? The law of supply and demand will kick in and bring an ugly halt to buying other things -- food is a must, but if its taking more of your hard earned dollars, less is available for other things. Plus how does another 13 cents per gallon for gas this morning versus yesterday affect you? When this happens, inventories will again grow and the economy shrink causing the stock market to regress to much lower levels. Without a permanent fix to the economy, we continue to ride the roller coaster that we all know isn't flat and isn't a constant speed. Some see it as a risk, some see it as a thrill. When applied to the market, know when its safe to hold your arms up and duck your head. I feel we're still being cranked to the top before the first steep fall. Will I continue to play the game? To gamble that I will pull out before others? Yes. Keep an eye on Protectionism (remember?) and now also Inventories. The Housing market may be getting its last boost from home buyer credits. When you hear talks of firing up more printing presses or more stimulus/bailouts RUN!