Larry Kudlow

The great American consumer has been written off so many times in the last couple of years, just like the rest of the economy. But he/she is alive and kicking. Another great story never told.

Retail sales came in at 1.4 percent for July, way above Wall Street expectations, while core sales excluding autos, gas and building materials -- a number that feeds directly into GDP -- increased 0.6 percent. Over the past three months, core sales rose 6.7 percent at annual rate, and in the past year they're up 7.4 percent. Excluding autos alone, sales have gained 9.2 percent in the last 12 months. That's big-time.

Sales of consumer durables also were strong. Some economists sounded the death knell for consumers when durable sales dropped in the second quarter. But in the newly released July report, durable-goods sales rose across the board: 3.1 percent for cars, 1.9 percent for electronics and appliances, 1.8 percent for building materials, and 0.5 percent for furniture. These are fat monthly gains.

Far too many investors, hedge fund managers and economists link the housing slowdown to an imminent consumer collapse. These bears are also quick to add rising gas prices and higher interest rates into their pessimistic outlooks. But they skip two very significant data points: Jobs and incomes are still climbing.

It may well be that Wall Street keeps overestimating the monthly job gains, but the fact remains that jobs are being added at a noteworthy clip of about 125,000 per month and the unemployment rate remains low. Because hours worked and wages continue to rise, incomes are still increasing at a comfortable 6 percent to 6.5 percent yearly pace. If jobs and wages were falling each month, you could write off consumer spending. But that's simply not happening.

Charles Biderman, of Trim Tabs Investment Research in Santa Rosa, Calif., adds an additional bullish factoid: Individuals now hold $6.3 trillion in savings accounts, money market funds and CDs. In contrast, short-term debt -- notably credit card and installment debt -- stands at only $2.2 trillion, and is growing slowly. So, despite the housing slump, consumers have an excellent cash position. That is why Biderman is very bullish on the stock market, which he thinks will rise by 15 percent to 20 percent by year-end.

Larry Kudlow

Lawrence Kudlow is host of CNBC’s “The Kudlow Report,” which airs nightly from 7 p.m. to 8 p.m.