Reports of Consumer's Death Exaggerated: Today's Outrage

NEW YORK (TheStreet) -- To hear Howard Davidowitz tell it, the U.S. is in a "death spiral."

Our mounting debt from banking bailouts, stimulus packages and wars put us "in the tank forever," the retail analyst says on Yahoo's Tech Ticker.

That's just crazy talk. Forever is a long time, Howard, so I hope you are just exaggerating for effect.

If the consumer is dead, how did Williams-Sonoma eek out a profit in the second quarter and why is DSW raising its full-year outlook? Even Chico's reported a recession-busting quarter.

We're talking about higher-end women's wear at Chico's(CHS Quote), designer shoes -- albeit at discount prices at DSW(DSW Quote) -- and top dollar home furnishings over at Williams-Sonoma(WSM Quote).

Spending on those kinds of things is far from a sign of the apocalypse.

Now I have to admit that for the most part, the retail sector winners have been the cheap stores like Big Lots (BIG Quote) and Dollar Tree(DLTR Quote). I will also yield on the point Davidowitz makes about the end of lavish spending and the return of savings and even a degree of frugality.

For those reasons, Davidowitz likes stocks such as CVS(CVS Quote), Kroger(KR Quote), Wal-Mart(WMT Quote), AutoZone(AZO Quote) and Kohl's(KSS Quote). Those are the retailers that provide value and help consumers stretch a dollar. I get that.

So putting aside all the hyperbolic rhetoric from Davidowitz about the end of the world as we know it, I think we may actually agree on his core point that the market rally we've been seeing is out of touch with the reality faced by consumers.