August will more than likely show strong consumer spending, but this will basically come as a result of back-to-school spending. The main concern will be looking three or four months into the future when the time comes for the busy holiday shopping season. Unless something dramatic comes along to give a boost to consumer confidence it could be a tough holiday season this year for retailers.

The current housing slump is the worst that we have seen in 16 years, and unless this reverses there is little doubt that consumers are going to start to spend less and save more. Even in July, which saw a rise in consumer spending, we also saw a jump in savings. The personal savings rate moved up 0.2% to 0.7%.

One of the main factors that will determine consumer spending in the months ahead is the degree to which the mortgage meltdown will affect economic growth. The jury is still out on this debate. The pessimists among us are calling for a recession, and even the most optimistic seem to believe that we are going to see at least a little economic slowdown in the months ahead. The degree to which this slow down is felt will impact the job market, new job creation, and consequently impact spending.

Wall Street is hoping to get some good news from President Bush on the housing slump. As Douglas McIntyre mentioned earlier this morning, Bush is going to make a speech today urging Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to do whatever is needed to ensure that troubled mortgage holders get the help they need to keep them from defaulting on their loans. This comes as great news ... but as Doug pointed out, the speech could have little to no long-term effect.

So while it is encouraging to see July spending figures on the rise, there are just too many unknowns out there to really read too much into the month's results.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.