Welcome to Thoughts on the Market.

I'm Mike Wilson, Chief Investment Officer and Chief U.S. Equity Strategies for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about the

latest trends in the financial marketplace.

It's Monday, August 23rd at 11.30 a.m. in New York, so let's get after it.

There is an old adage that says, never bet against the U.S. consumers' willingness to

spend.

In fact, it was one of the primary reasons we led the charge on recommending consumers

technicals back in April of 2020 at the depth of the COVID recession.

With Congress quickly providing record amounts of fiscal stimulus last year, the table was

set for a major consumer stand against the downturn.

Fast forward 16 months and it's fair to say the U.S. consumer is not disappointed.

However, after a year of remarkable resilience from the U.S. consumer, it begs the question,

is it sustainable?

While there's little doubt about the U.S. consumer's willingness to spend, the other of key

variable to consider is their ability to spend.

After writing one of the best periods of outperformance for consumer discretionary

stocks in history, we downgraded the sector back in April of this year, given our view

for an eventual payback in the consumption we experienced during the pandemic.

The reasons were twofold.

First from our analysis, it appears as if there wasn't much of a recession at all when

looking at real personal consumption, which is currently 15 percent above its long-term

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