Consumer psychology is highly fluid and data dependent, so don’t be confused by the following conflicting responses.
U.S. consumers now estimate they will spend $704 on Christmas gifts this season, down from their $786 average prediction in October. Americans’ latest estimate is also significantly below the $770 they forecasted at this time last year. – Gallup
At the same time, on a non-quantitative basis, these same consumers suggest that they plan to spend “about the same” to slightly more than last year.
As far as this data relates to U.S. equities, there may not be a downside. Given that the current quantitative easing policy will likely stay in place at least until March, any reduced expectations in holiday spending allow for subsequent upside surprises. That is, the “worst case scenario” is that consumers spend less and quantitative easing continues at its current pace through March. The “best case scenario” is that consumers outspend expectations and quantitative easing continues through March.