It appears there are more than just one or two Fed Board Governors who are getting close to hitting the “raise the rate” button. The problem is our economy is still on shaky ground. Yet that may beForeign Investors turning around, especially so if consumer sentiment continues to rise. According to data released just today, Consumer Sentiment came in stronger than expected, with a 91.2 reading compared to the 89.8 that analysts had expected. Not a big swing, but better than the other way around. In addition, the Consumer Confidence Index released this week surged to 104.1, much higher than the expected 99 reading. This is the highest reading in more than a year. Combine both consumer sentiment and consumer confidence and we might just be spending our way into a significant recovery.

 

So far though, the data has been like riding a shallow rollercoaster. Up and down but with no major moves to either side. This conflict has kept the Fed somewhat divided although there is a feint clamoring from Wall Street that it’s about time we started raising rates and getting closer to a “real world” economy instead of a near-zero interest rate environment.

Job data is still relatively strong yet GDP numbers, while positive, are still nothing to write home about. The economy needs growth numbers closer to 3.0 instead of 1.0. The latest Q2 estimate came in at 1.4, up from the original 1.1 number. That’s really not enough growth to spur an economy. What may come to pass that will get the economy going is an extended streak of consumer confidence which typically translates into higher retail sales, inventories and durable goods orders. If consumers open up their wallets to go along with their sentiment and confidence, higher rates will be sure to follow.