The headline from the MSM this morning was that consumer spending was really strong in December after a fantastic November.
Consumer spending rose a seasonally adjusted 0.4% last month, the Commerce Department said. Economists polled by MarketWatch had forecast a 0.2% gain. The advance in December follows an upwardly revised 0.6% increase in November. The pace of spending in the last two months of the year marked the strongest back-to-back gain since the first two months of 2012.
The lead into this story makes it sound like the consumer is healthy and doing fantastic. You have to go over to Zero Hedge to find a chart that says it all.
Does this chart show a healthy consumer? It shows me we’ve entered a world of pain. Buried in the propaganda spewed by the corporate legacy media is the FACT that real disposable income FELL in December. The consumer had to delve into their dwindling savings to create that STRONG spending in December and November. The savings rate was 5.1% in September and plummeted to 3.9% by December. Last December the savings rate was 8.7%.
Do the oligarchs realize their propaganda doesn’t pass the smell test? They desperately want the ignorant masses to believe consumer spending was strong in November and December. We know for a fact that retail sales absolutely sucked in November and December from the Commerce Dept report from two weeks ago. Sales declined at auto dealerships, furniture retailers, electronics stores, and home stores. We know for a fact that virtually every large retailer in the country has reported dreadful sales and profit results for their Christmas season. Wal-Mart issued a profit warning today. Target issued one two weeks ago. Macys, Sears, and JC Penney are closing stores.
A critical thinking individual might wonder how consumer spending could be really strong if every major retailer is reporting horrific results. Luckily for the oligarchs, critical thinking is a skill not used too much in this country. Edward Bernays’ students of propaganda in the government and MSM know this and utilize our ignorance to the max.
The MSM story mentioned that the increase is being driven by spending on services. Now we are getting to the truth. The average American is ramping up their consumption in Obamacare premiums, utility bills, tolls, sewer fees, and the myriad of other government driven costs. The average American is dipping into their savings to pay for the massive Obamacare premium increases. I guess that doesn’t make a good headline on Marketwatch.com.
Going to the actual data reveals a few more interesting tidbits about the strong consumer:
- Total personal income, before inflation, in December was 1% below last year.
- Total wages, before inflation, were up by a whole .6%.
- No need to worry. Government entitlement transfers soared by $53 billion over the last year.
- Bernanke did his part by making sure senior citizens and savers didn’t earn one nickle more than last year in interest.
- You’ll be happy to know that even though wages barely budged, the government syphoned off an additional $100 Billion of your money in taxes versus last December.
- Disposable income was 2% lower than last December, before inflation.
- Americans spent $400 billion more this December than last December by drawing down savings and borrowing. They didn’t spend this at retailers. They borrowed for 7 years to essentially rent new cars, paid more for food, energy, rent, tuition, and Obamacare premiums.
Does this present a picture of a strong consumer? My favorite piece of data from the government website is at the very bottom. It is Real per capita disposable income. It takes into consideration inflation and the fact that the US population grows by 2.2 million people per year. This info paints the real picture of the American consumer.
The real disposable personal income per person in this country was $36,877 in December. It was $38,170 last December. That is a 3.4% decline. And remember, that is using the hugely understated CPI. Now for the really good stuff. The real disposable personal income per person was $37,584 in May of 2008. We are now almost six years later and disposable income per person in this country is still lower than it was in 2008.
Obama proclaimed all the great things he had accomplished in his five years in office. If unemployment has plummeted and the economy is booming at 4%, how can this be so? It can’t. You’ve been fed a fake storyline. It’s like the American Dream. You have to be asleep to believe it.
And anyone peddling the storyline that 2014 will be better is a knave or a fool – or works for CNBC. Over 1.2 million people just got booted off the long-term unemployment rolls. The SNAP program will be doling out $5 billion less of your tax dollars in 2014. The stock market appears to be a tad shakey. Obamacare premium increases will be pounding those employed. Small businesses will not be hiring. Retailers are firing thousands of employees. Energy prices will set new records. Droughts in the West will result in higher food prices. Home prices will fall as home sales stagnate.
Sounds like a recipe for a great 2014. The storyline has been played out. The people don’t believe anything the oligarchs say. We have been lost in a blizzard of lies, but we can see the truth off in the distance if we look hard enough.
Looks like it’s time to become a vegan.
Bob.
Every day I turn on the news and am fed lies about how things are doing ok, how we are rebounding. I cross people frequently when they tout this information as gospel.
I have hit on my “silver bullet” stat that fully supports my stance, and is so damned easy to explain that even public school educated mouth breathers can understand it.
Median household income. We make less than ever, and this is with more parents working. It decreases substantially when you take into account we have 30% more two-income houses than we had before LBJ’s reign of error.
On a side note, the drought is good news for us, sales aren’t projected to start sliding until a couple months later than normal this year.
Bob,
Buy the beef, save a rancher.
EF
efarmer,
I will have to make a visit up to Hardscrabble this summer. It is only 2 1/2 hours from where I live. There is actually a dairy down the street from my house, where my daughter works the ice cream stand. They just started to raise cattle for meat that graze out in the fields. I will have to look into that. When we were younger we raised our own pigs, turkeys and goats. My brother would raise a steer each year, we had a big ass barn. It is much harder now and unless you have land it is not practical as hay has gotten very expensive. We use to have it trucked down from Canada at about $1.25 to 1.75 a bale, delivered.We would take in about 3.5 to 5 ton for the winter, depending how many animals we had. That is no longer practical.
Bob.
Bostonbob, you’re spot-on about the price of hay. I returned a few days ago from the CA central coast and noted a sign on a farmer’s fence who was selling Alfalfa at $12.75 a bale and Timothy at about a dollar more. I can’t imagine paying that much.
As a kid in the 60’s, I remember buying hay with my Dad for our livestock and we paid between 60 and 75 cents a bale. But inflation is under control, of course.
My next-door neighbor quit his job of 30 years last June. On a Tuesday afternoon, he decided he had simply had enough. He based his decision, in part, on the MSM reports about the economy improving significantly and a presumption that he wouldn’t have a hard time finding another job. I was utterly incredulous when I found out what had happened; I had seen his pickup in their driveway for a few weeks and assumed he’d been laid off. The fact that he had quit of his own accord literally blew my mind.
Well, six months later he was calling me up asking for help with his resume and for advice on applying for a job with a national company hiring for a local sales manager position. I coached him on how to circumnavigate their HR department and find the person who would be supervising the new hire. I wrote his cover letter and he emailed it directly to the guy. Sure enough, he landed an interview.
Well, that was as far as my help could take him. The week after his interview, which he said had gone fairly well, he found out that they’d picked someone else for the position. The news left him reeling and bereft.
Since then, I have continued to coach him in his job search. He has leveraged all his contacts in his field but has yet to find any open positions anywhere near his former salary level. He and his wife are now living off of her $12/hour job at a food distribution company. I’m guessing she’s not getting her nails shellacked every week anymore. He has had to sell his pickup truck and is looking at selling their RV this spring. The house would have been paid off years ago if he hadn’t taken a loan out to cover his son’s college tuition at a marginal private university. The son graduated two years ago but has yet to find a job outside of retail; today his degree is earning him a whopping ten bucks an hour.
While they are nice people and I continue to keep my eyes open for viable job prospects for him, I can’t feel bad for them. Not even close. His circumstance is entirely his own doing. Ignorance isn’t forgivable in the Internet age. Making bad decisions on bad information comes back to the decision to buy into the bad information. Myopia creates the illusion of utopia, and they were living it up in theirs for years and years. Without corrective lenses, and in this case an intellectual curiosity that would make them question their illusory reality, the myopic will invariably fall directly into the pit with no means of getting out.
I was in Best Buy last night for a laptop expecting to be the only customer in there, but whoa, there had to be 25 or so live customer types. As bad as I know it really is, somehow people are still buying. I just don’t get it. Both my wife and I work and make good money, yet we are cautious consumers typically only buying when we know we can pay it off wthin one month. Yet , I go into the mall, Best Buy, whatever and clearly folks whom you know shouldn’t be buying big ticket items are still going crazy and buying. Like their addicted –either that or so oblivious of whats coming down the pike, its better they don’t. I am clearly living in a world I don’t understand.
It is not that hard to understand. The PAHHTY is over, but nobody wants to acknowledge it. Who really wants to give up the EZ travel in your personal car, the vacations in Hawaii and on Stinking Cruise ships with other Fat People?
The people running the show certainly do not want to give up their Perks of Private Jets and $5000 a Blow Job Hookers.
Nobody wants to give up their Iphone and all their “Friends” on Facepalm. Nobody wants to give up on Avocados imported from Chile or Feta Cheese imported from Greece.
Culturally speaking, the hoi polloi is SOLD on the idea this sort of shit can continue in perpetuity, nay it will get even BETTER! Food Replicators, Star Trek style! Flying Cars! Homo Sapiens Trekking the STARS, depositing our fabulous Genome all over the fucking UNIVERSE!
Who wants to let go of this dream to live in a decaying McMansion when the lights go out, the toilets don’t flush and you can’t watch Breaking Bad on the Plasma TV anymore?
So the dream is sold one day more each day, for as long as it can be mustered up in a few places, fewer all the time. Letting go of this chimera is very hard for people who were brought up to believe it would always continue, always get bigger and better. It won’t, but most are not ready to accept that yet, and they never will be until it is forced on them, and forced on them it will be.
Your choice is to exit this Matrix now if you can, best you can. Not entirely possible, but partially possible yes. You gotta realize though that the Industrial Lifestyle is going the way of the Dinosaur, because it just ran OUTTA GAS.
RE
http://doomsteaddiner.net
As someone said,It will continue to function until it don`t. Then SHTF.
Once again, a great job by the Admin of revealing the truth. Still the most challenging thing is to get a majority of the public to see the truth – and act to make real reform happen at election time.
Polls show over 75% of citizens don’t trust the government. Congress’ approval rating is down to 5%. Record numbers of citizens struggle on food stamps, long-term unemployment, and poverty with NO opportunity to find decent jobs.
This alone should make voter want to toss out BOTH republicans and democrats. Unfortunately, many have been made to be financially dependent on government so despite people’s anger and low opinion of politicians, they are reluctant to replace both parties for fear of losing some or all of their monthly government subsidies.
But if voters won’t replace both parties with independent candidates not owned by anyone (short term citizen-legislators registered as write-in candidates) to make the crucial reforms (trade, spending, tax, etc.) to grow millions of good jobs and get our crushing debt under control, most will face a very bleak future as the middle class, our economy, and country become weaker – and eventually collapse.
The economy is an awful lot like Tinkerbell – you’ve just got to believe! If enough people “believe” in the idea of a recovery then we’ll have a recovery right? Am I missing something here?
First, Thinker drops the f-bomb a couple of days ago in frustration over these twisted lies about the economy. Thinker never swears. Now RE, also a non-swearer, chimes in above with “Homo Sapiens Trekking the STARS, depositing our fabulous Genome all over the fucking UNIVERSE!”
I just looked at the National Swearing Meter. It’s pegged. Things really are bad.