UBS: Mood swings

Stereotypes are used as commonly in finance as they are in the rest of life. The brain uses stereotypes because it believes them to be 'right enough' and saves brainpower if you can just make assumptions rather than have to think about them. 

Sometimes this is a useful time-saving mechanism, at other times it can lead us down the wrong path. Consider one of the most enduring stereotypes of the last few decades: the US consumer. Often referred to as the 'consumer of last resort', the exuberant and ever positive US consumer never allowed anything to get in the way of their spending. 

Of course, this stereotype took a beating during the financial crisis, when all that debt-fuelled spending finally came to a crashing end. Yet since then US consumption has picked up more than in other major economies. Credit has started expanding again. Does this mean that the US consumer is back on form?

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