ROSY SCENARIO may be the belle of the Christmas ball, but she is due to be replaced by her only slightly less ebullient cousin, Goldilocks, in the New Year. In business-press jargon, all signs are that retailers here will have a merry Christmas, to be followed by a slowing but still healthy economy in 2007.
Consumers are in a rather good mood, much cheerier than at this time last year, according to the University of Michigan Consumer Sentiment Survey. With reason, according to the Bush administration, which released its updated economic forecast last week. Although revised down from earlier guesses to reflect the housing slowdown, the projections paint a far-from-gloomy picture. Inflation-adjusted growth is expected to come in at 3.1 percent this year, and 2.9 percent in 2007. Perhaps more important, real wages have finally started to rise noticeably–a full-time production worker will take home almost $1,000 more than he did last year. That won’t end the debate that is raging about inequality, especially since Wall Street firms are about to hand out multi-million-dollar bonuses and investigators are digging into corprocrats’ practice of backdating their options, but it should make most consumers feel in a spending mood in the next few weeks.
