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Tickers in this Article: MA, V, DG, FDO
The U.S. economy is all about the consumer. Over two-thirds of gross domestic product comes from consumption. A confident consumer makes for a growing economy, otherwise the economy gets stuck trying to recover. Without the U.S. consumer, there is little hope for a sustainable economic recovery.

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Consumer, Consumer, Consumer
At the moment, there is very little for consumers to be confident about. Unemployment at 9.1% only tells half the story. By some estimates, when you count the number of folks who have stopped actively looking for work, the real unemployment number is actually closer to 16 to 18%. The situation isn't helped by the dismal housing market. Even those who are employed are uncertain about the value of their homes, so the natural reaction is to curtail unnecessary expenditures. The negative feedback continues to feed on itself and draining consumer confidence in the process. Many feel that until the housing market recovers, consumers will continue to be nervous and thus restricting any sustainable recovery.

Look at Yourself
Lack of confidence doesn't mean a consumer is dead. In fact, a close look at yourself and your behavior may inspire some investment ideas. Many consumers are using a debit card more, these days, instead of a credit card. That benefits MasterCard (NYSE:MA) and Visa (NYSE:V), the two largest payment networks in the world. It doesn't matter if you spend $100 on groceries or $100 on a vacation, MA and V get paid the moment you swipe your card. If the new debit card fees, that some major financial institutions are thinking of implementing, go into effect, consumers will likely shift to use credit cards and pay balances off each month. In that case, MA and V will still do fine. Analysts are predicting continued solid growth from both companies over the next several years. Analysts expect MA, trading at $336 a share, to earn $17.73 a share in 2011 and $20.84 in 2012, just slightly over 16 times 2012 earnings. For Visa, trading at $92 a share, the EPS numbers are $4.96 and $5.70, respectively. For the expected growth, the shares are reasonably valued.

Saving money is no longer restricted to the frugal; even well-employed middle class Americans are doing what they can to save. That means more visits to discount stores like Dollar General (NYSE:DG) and Family Dollar (NYSE:FDO), where you can get essentials like toothpaste, detergent and paper towels at prices lower than even Wal-Mart can provide. A recent report by Dollar General confirms that the stores continue to attract a growing base of affluent shoppers, defined as those households with annual incomes above $70,000. A new class of shoppers will provide additional long-term growth for DG and FDO; with P/E's of 20 and 18, the valuations are not excessive when coupled with the potential growth.

The Bottom Line
A weak consumer still has to live and go on with life. What changes are priorities. Understanding what those new priorities are can help investors navigate today's new economic environment and the new consumer that comes with it. (For related reading, also see Consumer Spending As A Market Indicator.)

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