What Do Apple, Google, Walmart, and Amazon Have In Common?

The consumer is a dominant factor in GDP growth. The U.S. economy has avoided the Great Depression II and seems to be ending the Great Recession. However, we aren't convinced good times are coming. The consumer is saving and not spending. Small businesses are cautious with their hiring and can't get credit to grow. Bankruptcies continue to rise and the commercial real estate collapse is in progress. Of course, the Stimulus plan has helped create short-term spurts in housing and autos while piling more debt onto the United States balance sheet. Does this sound like good times are coming?

There are some bright spots as the stock market's huge leap from the March lows has given most people a feeling that better times may be ahead. That may be true but unemployment continues to grow and high leverage still remains with consumers, businesses, and the government. We are now in an economy where spending is picking up a little but only for bargains. Of course, consumers will also pick up the hottest new item if there is value to be had.

Apple, Google, Walmart, and Amazon have all announced good earnings and growth. Why is that? In an environment where consumers use caution, they will buy what they need at the lowest price. If there are any discretionary funds, they will buy the products which have the best value. Apple has the hottest products with great value; Walmart and Amazon are large supermarkets of goods sold at the most competitive prices; and Google is the vehicle to search for the best value at the cheapest price. Until we have an economic environment where the future becomes more certain, the consumer will continue to migrate to those companies that lead in value.