In case you hadn’t noticed, the MSM storyline was obliterated this morning with the December retail sales report. There is absolutely no way for the shysters and charlatans in the media, Wall Street or government to spin this data in a positive manner. The shit is hitting the fan. A recession for the average American is confirmed. Plunging gas prices haven’t done shit to motivate people to spend money they don’t have.
And guess what you won’t hear from CNBC or any of the corporate media?
POLAR VORTEX
You see, that was the storyline last year to explain the terrible December and January retail sales. So let me get this straight. Last December the country was buried under snow in sub-zero temperatures versus a tranquil, calm, non-snowy December this year. Not a peep from The MSM about last December’s Polar vortex
Shouldn’t this great weather, “fabulous” plunge in the unemployment rate, and billions of dollars put back into pockets by collapsing gas prices, have spurred an awesome retail sales surge this year? The Wall Street shysters drove the stock market to record highs in December based on this false storyline. The decline in real wages in November revealed the falsehood of the jobs recovery. Any savings from lower gas prices is being used to pay down credit card debt and pay for the dramatically higher healthcare costs caused by Obamacare.
This economy is in the tank and headed lower. The GDP numbers are a sham. The employment numbers are a sham. You know it. I know it. And now the sheep are waking up and realize they have been lied to. Stock market records are meaningless to people trying to get by on a daily basis.
After perusing the data on the Census Bureau website, here are my observations:
- Year over year retail sales only rose 3.2% in December. That is before inflation, which the BLS says was 1.7% and I say is above 4%. Either way, real sales sucked. Then take into consideration there were 3 million less employed people and a polar vortex last December.
- The MSM said consumers had a windfall from the $6.5 billion decrease in gasoline sales. We were all supposed to buy a new HDTV or iGadget with our newly found riches. Oops. Electronics and appliance sales FELL in December versus November.
- Retail sales simply don’t fall in December versus November unless you are in recession or headed into recession.
- It seems even the subprime auto loan scheme is petering out. Auto sales (7 year rentals) declined in December. Maybe the fact that auto loan debt delinquencies are approaching 2008 levels is giving them pause in selling autos to people without the means or inclination to make the payments.
- Anyone looking for a JC Penney, Sears, Macy’s led department store revival is sad. Clothing store sales dropped. Department store sales dropped. Sporting goods store sales dropped.
- And drum roll please. On-line store sales DROPPED. The Amazon revolution is dead.
It seems the markets don’t like it. The pain has just begun. A global recession is underway. It’s a deflationary unwinding of debt and mal-investment. There is no cure except for collapse. Central bankers have shot their load. Their credibility is shot. No one believes more debt will cure a debt problem – except for a few Ivy League educated economists. A shitstorm is a brewing. Get ready.
Everyday I drive past a major Chevrolet dealer. Looking down from the freeway – I would estimate he has 2,500 new cars and trucks – parked in a back lot. Those vehicles have the same amount of snow on them now – as they had two months ago!
Detroit claims auto sales are booming. Maybe just off loading inventory.
Why blame the retailers?? They are doing their best to lure you in. Buy 1 get TWO free!! Zero percent interest!! Don’t pay until 2020!! What the fuck more can they do?
The reason the economy is bad is because of …. YOU!!! You’re not spending enough. You’re hoarding cash. You are bringing America down, baby. Spend more, you cheap-ass bastards!!!!
You need to channel your inner Iraq.
They just spent ONE BILLION dollars buying Russian military stuff. Buy one tank, got two free. See how it works?
http://www.iraqinews.com/iraq-war/iraq-purchases-1-billion-worth-rocket-launchers-guns-russian/
That would fit with what I saw while doing my (admittedly limited) Christmas shopping. Even The Woodlands Mall (one of the Rodeo Drives of Houston, we have two such areas, heh) had very sparse foot traffic.
Hiring also sucked for the college kids who usually work for 1-3 weeks on the Christmas break to help pay for college (and avoid college loans).
But hey! To hear Obozo talk, the economy has never been better, the world is safer, race relations are better and, FORE!
https://tse1.mm.bing.net/th?&id=HN.608021649883529785&w=300&h=300&c=0&pid=1.9&rs=0&p=0
Hope
Is the oil price collapse going to crush Houston’s economy?
But internet sales on Dec 24th using a Droid smartphone were up 11% from last year. That’s double digits, baby.
Are we going to need a satelite link-up to view TBP when the end comes? Admin…..are you on this? It’s time to get the man-with-no-name on the horn and ensure my fix going forward. This is important stuff – contingencies and all.
Well, wars didnt fix the economy, neither did devaluation of the dollar [QE] nor did lower oil prices. Draghis about to fire up Bernankes helicopter…think that’ll work?
Naw.
Well, must be time for some more Broken Windows.
@Admin: It is certainly going to hurt it, but not as bad as the 1980s as the economy has significantly diversified since then.
One “marker” of how robust the oil business is in Houston is the price of Russian Sable Mink coats. When oil times are good, these babies go for $300K a pop, when not, “only” 100K each. Evidently, one way to swing a big oil deal is to give these as gifts to the wives of whomever you are trying to schmooze.
Having tried one on once, I have to say that my moral compass spun around a few times. They are awesome. And no, I do not have one, sigh.
What will really kill us is the continuing waves of illegal immigration (& all the impact on healthcare/schools/criminal justice system that has), the ongoing decimation of NASA, the insanity of the EPA’s rules on coal and water. In short, all “gifts” of Ozero and the fed.gov.
What may “save us” is the increased ocean traffic that will come to the Port of Houston with the widening of the Panama Canal.
Also, guns, lots of guns and ammo, lots of ammo.
I am a big fan of Texas sucession, actually. We’ll take everything due East to the Carolinas and due north to the Dakotas (but just for you, I’ll include Wildwood, The 30 Blocks and Kulpsville as Colonies, heh heh).
But, but, but, I thought trickle down economics worked? Shouldn’t all that QE money be trickling into the economy into the hands of the little guy? Wait, no? You mean to tell me macroeconomic central planning is not moving money through local economies? It is not increasing the velocity of money and spurring growth?
On a side note, I wonder what is going to happen this tax season when people have to file with the new Obamacare mandates. I am estimating a lot of people won’t be filing their taxes this year. I already looked up information about how to file my taxes this year and surprise, surprise, I couldn’t understand it.
How can we spend money on Christmas when our mood and fatass meds are now 100% out of pocket until our deductibles are met?
How can we spend money on Christmas when our formerly nearly full time job has been reduced to 25 hours a week (and yes, it NEVER occurs to us to take a second shitty job to make up for it)?
How, when our EBT doesn’t pay for Grand Tourismo games?
How when we have to save up a grand to file our taxes and we only make $20k a year?
Paying attention to tv and internet ads is telling if you know what to look at.
And by the numbers of killer meds, oops, I mean helping meds, and tax return ads, that shows me better than reporting what the truth is.
Anxiety pills, cancer treatments and tax returns with a smart phone, THAT is our real economy.
And along with suicide it is BOOMING.
Success.
“How when we have to save up a grand to file our taxes and we only make $20k a year?”
I am already planning on not filing my taxes this year. I never make enough to ever owe the federal government, and any refund I would get would be money spent to pay for them to be filed. I honestly can say this year I would not be able to file my taxes myself because of all the red tape from Obamacare. I absolutely do not understand any of the procedures for filing. I am curious to know how many other people are not going to file either.
The “reset” is underway. Events are in charge now, and they are likely leading back to an economy, and society, that is greatly “simplified”, but not in ways that are going to make most of us happy, but might at least establish a basis on which our young people can rebuild a viable economy in which it is possible to earn a modestly decent living, while saving money that can be invested in industries that we will need to replace the imported goods that will no longer be so cheaply available, and build the industries that will be relevant in a world with far less disposable income, and a need for new technologies that make the most of our depleting resources.
Would it be that it had taken place much earlier on, when this country began to lose its manufacturing and its layers of good jobs requiring many skill sets, in the late 70s onward. But, instead, we decided to play pretend & extend, and opted for financialization, setting into motion the biggest borrow & spend binge in the history of the world, while incomes for the bottom 90% stagnated, then fell.
Resets mean massive economic and social upheaval, and they are never easy or clean, but they are necessary. They always mean severe hardship for most people and always leave a substantial body count; and they usually mean a major war. Many babies may be tossed out with bath water, which is unfortunate. However, we may emerge from this one with a population of young people who are, like the young G.I. gen people who reached adulthood in the late 20s, “scared straight”, properly chastened into honesty and prudence.
@Steph, the absolute illogical complexity of the system is nearing its end. There is just little way for this mess to carry on.
As for not filing, I get the feeling that millions will be finding out whom the “rich” truly are.
Based on complexity of filing and costs, my guess is our controllers believe the “rich” are the minimum wage/part time people that are not on the government SNAP and insurance teat.
My only happiness with the insanity is that I know – beyond a shadow of a doubt – that overcomplexity always fails. That which can’t be sustained, won’t.
The damn wait is horrible, as will be the thousands and thousands that end up prison for not filing tax forms correctly.
But, at least we are secure in our knowledge that they are criminals all. Else OUR government would not be incarcerating them, nor stealing their labors.
I feel so much better now.
The reason we don’t have major inflation is because the velocity of the money has tanked. Most of the QE is in the banks / stock market (bank investments).
If the money ever gets out into the general economy – pow! Inflation to the max.
I am more and more dubious about a 4th turning – or when it’s going to happen at all. I get the feeling that every system / statistic / politic has become so controlled and manipulated that TPTB may have warped the US so much that it’s not the same place, and thus what Strauss and Howe observed is now incorrect.
I hope I’m wrong. But I feel more and more pessimistic.
The report is while jobs went up, average pay went down. So just more real part time jobs created, just fake good paying jobs were manufactured, not a real recovery.
Same shit, different day. But this time is different, because ___________.
@TE, This complex system has got to go. I am predicting most Americans could skip filing all together (you really only need to file if you actually owe money to the government) without consequences. I am also predicting there will be less people filing due to not understanding their taxes, not actually owing money, and because of how many young people are students or unemployed.
@Dutchman, My theory is the reason Obamacare (and the 30 hour work week) was pushed on us to prevent QE from accelerating the velocity of money. When the Federal Reserve was created so was the IRS and income tax. This was for the government to suck any extra money out of the economy to prevent hyperinflation. Except now corporations have off shore tax havens and equity groups to insure their money neither goes into he local economies or to be taxes by the federal government.
Most of the QE is lent in Dollars at low interest rates to foreign entities and emerging markets.
Things look hunky dory in a up swing. Low interest rates coupled with the fact that the dollar was losing value against the local currency. Not only did you pay a lower interest rate , the value of the currency you borrowed in was going down.
Oh, how things have reversed . As the dollar is perceived as the safe haven and its value is rising. Now those cheap loans don’t look so cheap.
On a similar note, I wonder what things must look like in Greece with a depressed economy and rising import prices as the Euro falls.
That’s inflation for you. Make less and pay more!
The sooner this fiction is over the better, the worthy may not fare any better but at least undeserving may suffer for once. I personally am sick of buying a week’s worth of boxed pasta and canned soup for $50, only to see a non-English speaking family unloading whole carts full of fresh food into the back of a shiny new bank owned CRV and jabbering all that way back to their subsidized housing.
I went to Mid-Rivers Mall yesterday. It is located in the wealthiest county per capita in Missouri. It was almost devoid of customers. I saw at least one “going out of business sale” going on. Anecdotal I know but the gut feel was spooky. The thing that shocked me in the article above was a drop in sales of December from November. This just does not happen. The 4th Turning is indeed gathering strength on the horizon.
@Dutchman, too many dollars chasing to few goods, right? That’s the classic explanation we’ve all been taught but people aren’t chasing, the money just sits – put when the storm really blows and and the manipulation ends reality will return. Any number of events in any order could occur – but for example, look at Venezuela’s people standing in lines. Another…..what happens when alllllllll those trillions of dollars come home for redemption – even a small percentage….personally, I think you are see the deflation side of the coin. The inflation side will be shown to you when you’re least ready. Inflation in what your need, deflation in what you want.
@Steph, on the not filing unless you owe.
Only technically true. Reality is if you don’t file you are granting the IRS the right to audit you decades and decades later. At the point you have no paperwork to back your decisions, they will still have all theirs.
The IRS can only “audit” the past three years of FILED returns. No file, no statute of limitations.
However, they can audit you forever if they suspect fraud.
Not filing is like not talking to a cop. Failure to speak can now be used against you (thanks Supremes you Communistic Rich bastards), as can failure to file.
Back when I earned little taxable, I got in the habit of only filing every three years, but I still did it.
What I tell people that don’t fall under the taxable income guidelines, file anyway, just file it a bit later, if you don’t owe, you don’t even need an extension.
One last note, especially for anyone that earns any money in California, or from a reporting California company, especially if you don’t owe them, FILE.
Over the past few years Cali has been confiscating the bank accounts and assets of citizens and non-citizens alike, based on “estimated” taxes all almost exclusively related to the citizen/business having the mistaken belief that if they don’t owe anything, they have no need to file.
Not to mention you’ll need the “proof” of income for student loan repayments, free healthcare and other government gimmes.
No wonder I ran from public accounting, I still have a serious hatred and distaste for our system.
@Valerian, please for your health, if nothing else, learn to cook.
A $8 whole chicken with a couple bucks worth of veggies makes two full meals for my family of three, plus enough stock to start, or have, a couple more meals.
No chemically laden canned product can beat that price. None.
We have been conditioned by the very companies that make the money gained from pushing bullshit to think “eating healthy is expensive.”
It can be, but so can eating crap food-like products. A few hours of research and a little time and you too can eat much healthier without much money.
Good luck. I apologize for my unsolicited advice but it kills me to watch people voluntarily killing themselves because advertising, lobbying and paid-for “news” stories has them convinced there is no other way. There sure as hell is, for anyone that wishes to put in the time and effort to find it.
@Tommy / @Mark / @Stephanie / @ Admin / and others: Many learned opinions here. All have valid points.
What I’ve learned is that an observation is good as long as you are observing the same thing.
My pessimism with about there ever being a 4th turning is that TPTB have twisted the US so much that it’s not the same place (as observed by Strauss and Howe), thus the ‘Turnings’ observation may no longer hold water.
We may just suffer, for decades, on a slow, steady decline. Glad I’m 65.
TE- I worked as a waitress for many years and the thought of an income paper trail makes me LOL.
I’d argue that we are in the turning currently, which culminates in about 2029 – it appears that if violence foments its nearer the end of the turning. The lies, fraud, manipulation…..all of it – have only delayed the events and ensured that when they occur, they’ll be so much more violent, drastic, and immediate that the damage delayed will equate to needless additional collateral consequences. My personal view is that when ‘it’ begins, it’ll be a genuine class A motherfucker of a scope and scale never seen before. But what do I know.
2015-01-14 07:45 by Karl Denninger
Hairy Hissmas (Told You So!)
I told you this was Grinchmas….but no, it wasn’t said the crooners on the Idiotbox.
Wrong.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $442.9 billion, a decrease of 0.9 percent (±0.5%) from the previous month.
Worse…
Retail trade sales were down 1.1 percent (±0.5%) from November 2014
Ouch.
Now the unadjusted numbers were higher, of course — but they damn well better be, given the holiday. The only place that such sales are usually down is in building materials (it’s this nasty stuff called snow, you see) and indeed they were.
Gas stations were also down a lot, but that’s not a surprise since sales are in dollars, not gallons, and the price has gone down a lot along with oil.
The seasonally-adjusted figures, however, are ugly. How ugly? December was down both for pretty much everything that is Christmassy, including clothing, sporting goods, general merchandise (department stores), various miscellaneous retailers and online sales compared against November.
I’m not a fan of so-called “seasonal adjustments”, as you know. But if you live by the fudged numbers you wind up dying by them, and that’s exactly what you’re going to do today in terms of market reaction.
2015-01-14 07:30 by Karl Denninger
Just A Reminder…
Go read this Ticker again.
Then think on the following:
•Most of the employment improvement since the 08 crash has been in the energy sector, net-net. This is particularly true if you look at employment ex-McJobs (low-paying, part-time work.)
•The S&P 500’s energy sector is about 10% of the index. Those firms are going to miss, and most will miss badly. A material number of them are likely to have negative earnings (and maybe by a lot in the current and forward quarters.)
•Saudi Arabia and the UAE have said they will not protect oil prices. They appear to mean it. The UAE recently said that our shale and fracking production needs to be “curbed”; the way to do that is to make it uneconomical. Of course if that causes bankruptcies, well, too damn bad.
•Most of these firms and the governments in the vicinity of their projects have entered into commitments to spend money that can only be generated by profits and taxes if oil is around $100/bbl. It’s currently less than half that. Good luck with those plans.
•Nobody does this sort of spending with cash any more — they all borrow the money, and most of it has already been borrowed. Worse, nobody ever bothers to repay borrowings any more — they just roll it over and increase the amount. This is going to get very amusing when the cash flow is revealed to be insufficient….
The entire premise of the market has been easy money and more credit leading to financial engineering.
When the backing for that credit turns into a puff of smoke what floor is present under the market?
None!
Sounds like a rosy job outlook for all the college grads to pay off their trillion or so in debt as well.
Debt which I just recalled cannot be discharged by bankruptcy, Should be a lead ball and chain around the economies neck for quite a spell.
Another indication of collapse:
Food Stamp Beneficiaries Exceed 46,000,000 for 38 Straight Months
The number of beneficiaries on the Supplemental Nutrition Assistance Program (SNAP)—AKA food stamps–has topped 46,000,000 for 38th straight months, according to data released by the Department of Agriculture (USDA).
http://www.cnsnews.com/news/article/ali-meyer/food-stamp-beneficiaries-exceed-46000000-38-straight-months
That was me, above.
•Most of these firms and the governments in the vicinity of their projects have entered into commitments to spend money that can only be generated by profits and taxes if oil is around $100/bbl. It’s currently less than half that. Good luck with those plans.
Yes, the Saudis made commitments they can’t keep as well. The world over its the same . Too much government spending and too much government spending commitments going forward.
This may hit Texas hard as well. Even though they don’t have as generous of a welfare state as others. The government will try to raise taxes by whatever means necessary. As it looks like the new Illiinois back stabbing Rublican Governor is likely to accede to.
All I have to say is. When your going through a green light , it will change to a red light in the wink of an eye. The days of yellow light will become a thing of the past.
Ah, the wonders of spin: http://www.homeworldbusiness.com/Retail/Census-Bureau-December-Retail-Sales-Gain-26-percent-Year-Over-Year/26290
@TE:
I have gone to cooking almost entirely from scratch. Once you get the proper bulk raw ingredients built up, it’s cheaper, healthier, tastier and you have almost no trash like cans/boxes into the landfill.
You can make stuff up on the weekends and just heat it up at night. Your crock pot is also your best friend as well when cooking from scratch.
Having mastered canning my garden stuff (although gardening is a lifelong learning process, lol), this year I am moving into learning to make cheese.
I started with making butter from heavy whipping cream in my Ninja, there is a youtube video on this. It only took me about 15 minutes, it was the creamiest, yummiest butter ever and enough butter for the entire week.
Tonight I am making my own yogurt using my crockpot.
Stay tuned as The HZK Adventures in Cheese Making continues!!!
(Have I mentioned how totally burned out I am as a cancer doctor?)
If I could make my own cheese, I’d be like Costanza.
Steph. You should file.I have heard too many horror stories over the years. Just file on whatever tax forms are sent to you..But file anyhow. The IRS Will let you know if you forgot anything.
The fact that the IRS will be enforcing Obamacare should have told people how bad an idea it really was to start with.
THEIR kicking the can down the road TILL THE BIG ASTEROID HITS,Thats when everything will make a big change,Foreign invasion,will top the list,starving people,police gangs attacking,AND the CHINESE will be foreclosing on ALL their deth,THIS ain’t fixable,IT WILL BE WAR in the streets everywhere…..Taxes,hahaha,thats just to make you to poor to prepare,broke and depending on oboozo to save you,THATS insanitily,or maybe the FEMA DEATH CAMPS will save you,like they did in germany with the jews……………….
Arizona
I like the cut of your jib.
You are the first person to make some sense around here in awhile.
Please comment more often.
The US Economy Is So Bad… Even Lottery Sales Are Collapsing
Submitted by Tyler Durden on 01/14/2015 16:33 -0500
For what appears to be the first time on record, Powerball Lottery Sales declined year-over-year. As the following slides show, lottery sales declined 19% in FY14 vs FY13 and even more stunningly reflective of a nation whose disposable income (and hope) is in such short supply, sales in the first half of FY15 are down 40% from the first of FY14. As LaFleurs concludes, this will make it very challenging for most Lotteries to manage their budgets…
Lottery Sales are plunging…
Inside The December Retail Report: “Disappointing” Isn’t The Half Of It
by David Stockman • January 14, 2015
Today’s 0.9% decline in December retail sales apparently came as a shock to bubblevision’s talking heads. After all, we have had this giant “oil tax cut”, and, besides, the US economy has “decoupled” from the stormy waters abroad and is finally on its way to “escape velocity”.
The Wall Street touts and Keynesian economic doctors have been saying that for months now—-while averring that all the Fed’s massive money printing is finally beginning to bear fruit. So today’s retail report is a real stumper—–even if you embrace Wall Street’s sudden skepticism about government economic reports and ignore the purported “noise” in the seasonally maladjusted numbers for December.
All right then. Forget the December monthly numbers. Why not look at the unadjusted numbers in the full year retail spending report for 2014 compared to the prior year. Recall that the swoon from last winter’s polar vortex overlapped both years, and was supposed to be a temporary effect anyway—–a mere shift of consumer spending to a few months down the road when spring arrived on schedule.
On an all-in basis, total retail sales rose in 2014 by $210 billion or a respectable 4.0%. But 58% of that gain was attributable to two categories—auto sales and bars&restaurants—which accounted for only 28% of retail sales in 2013. And therein lies a telling tale.
New and used motor vehicle sale alone jumped by $86 billion in CY2014 or nearly 9%. Then again, during the most recent 12 months auto loans outstanding soared by $89 billion. Roughly speaking, therefore, consumers borrowed every dime they spent on auto purchases and took home a few billion extra in spare change.
The point here is that no economy can thrive for long—especially one already at “peak debt”—-based on consumer “spending” that is 100% dependent upon borrowed funds. Yet that has been the essence of the retail sales rebound since the Great Recession officially ended in June 2009. Auto sales, which have been heavily financed by borrowing, are up by about 70%; the balance of non-auto retail sales, where consumer credit outstanding is still below the pre-crisis peak, has gained only 22%.
Stated differently, the only credit channel of monetary policy transmission which is still working is auto credit. Yet as indicated earlier this week (see, “The US Hasn’t “Decoupled” And There Ain’t No Giant “Oil Tax Cut”) that actually amounts to a proverbial “accident” waiting to happen.
On the margin, the boom in auto loans, which are now nearing $1 trillion in outstandings, is on its last leg. The latest surge of growth has been in “subprime” credit based on the foolish assumption that vehicle prices never come down; and that the junk car loan boom led by fly-by-night lenders is nothing to worry about since loans are “collateralized”. That is, they could be made to derelicts and deadbeats as long as their location is known to the repo man.
The problem with that glib assumption is that it ignores the lesson of the housing crisis, where it was also said—by Bernanke himself—-that nationwide housing prices never fall. Yet what happened in 2006-2007 is that the residential housing stock got massively over-priced, and was then collaterized at these lofty, unsustainable levels. So when the last deadbeat mortgage borrower got funded, the price level broke and the house of cards came tumbling down, pulling prime borrowers as well as subprimes underwater as valuations plunged.
And so it goes with autos. Including the backdoor debt on rental fleets and leased vehicles, there is now more than $2 trillion of debt on the auto fleet, and there are millions of vehicles coming off-lease owing to the financing surge of recent years. When the subprime car loans begin to fail at double digit rates—-and frisky lenders like Santander are already there—-the repo man will get busy like never before. And that will mean, in turn, a tsunami of discount vehicles at the used car auctions, and a subsequent bout of price destruction up-and-down the entire auto food chain.
There reason is straight forward. Loan-to-value ratios are already upwards of 120% in many instances; and lenders are financing not only the vehicle purchase price, but taxes, title, insurance, amounts owed on “underwater” trade-ins and cash-back awards, too.
So when the new/used vehicle price chain breaks, there will be a spillover effect on the prime lending and new car segment, as well. Namely, credit terms will tighten dramatically owing to rising defaults; an increasing share of households will be too underwater on existing loans to finance a new car; and the sub-prime sector will go into shutdown mode, as it did after 2008, when the plug is abruptly pulled on its junk bond financing and private equity sponsorship.
US Auto Loan Debt Chart
US Auto Loan Debt data by YCharts
So, yes, retail auto sales have been in a V-shaped rebound, which seems almost too good to be true compared to everything else in the Census’s Bureau’s reporting. But unless auto debt grows to the sky, “pear-shaped” may be the next phase of the chart.
The 6% growth in the food and drink category reflects a second artifact of the Fed’s money pumping binge. When it comes to actual dollars spent in bars and restaurants it is not the median income household—-still 7% below its real income level of 2007—that has been splurging on an extra night out at Red Lobster. The truth is, its the affluent top 20% of households which drive the cash registers.
In that regard, has it been noted that the top 20% of households also own upwards of 90% of outstanding financial assets and especially stocks and mutual funds? Yes it has.
Indeed, while the Fed’s wealth effects fantasy has accomplished nothing for the main street economy—–this small $570 billion sliver of the US economy is the exception. The hearty rebound in bars and restaurants has given the talking heads something to chatter about with respect to the purported retail sales recovery; and it has also provided a reliable boost to the headline count on “jobs Friday”——-even if these “jobs” average about 26 hours per week and annualized pay rates of $17,000 per year.
Bread and Circuses Economy Jobs- Click to enlarge
Bread and Circuses Economy Jobs- Click to enlarge
Needless to say, the eventual bust of the Fed’s third financial bubble this century will hit “food service and drinking places” hard. As a recent analysis by the Atlantic Monthly noted, there are…
“….some pretty spectacular differences between rich and poor families’ eating habits. The richest quintile spends about 4X as much as the poorest in general– but it spends 6X on alcohol, 5X on dining out, and 3X on food.”
The crucial difference between rich families and poor families, as the Atlantic further noted, isn’t really
“….what they eat, but where they spend their food money. Poorer families eat much more at home. Richer families spend more money (but a similar share of their income) dining out.”
As shown below, the top 20% of households spend 5X more on restaurants than the bottom 20%. Viewed in aggregate turns the top 23 million households in the US spend about $125 billion per year on restaurants or more than the bottom 60% combined.
Screen Shot 2013-03-07 at 3.39.41 PM.png
http://www.theatlantic.com/business/archive/2013/03/cheap-eats-how-america-spends-money-on-food/273811/
So back to the 2012 retail spending report. Set aside debt fueled spending on autos and stock market goosed spending at bars and restaurants, and here’s what remains. Retail spending, according to the Census Bureau, for everything else in 2014—groceries, electronics, furniture, sporting goods, apparel, general merchandise, e-commerce etc.—– amounted to $3.724 trillion. That compares to $3.633 trillion in 2013, representing a rather tepid 2.4% annual gain.
And, yes, there was some significant inflation last year at the consumer level, too—-notwithstanding all the Keynesian gumming to the contrary. In fact, the consumer price index for 2013 averaged 232.81 compared to 236.76 in 2014.
it doesn’t require higher math skills to compute the resulting 1.7% gain in consumer prices—-and that’s if you believe that the BLS’ hedonically adjusted, geometrically mean’d, mix-adjusted index actually measures inflation. In any event, real spending for everything else in the December report clocked in at 0.7% gain.
But that should not be surprising. Outside of the beneficiaries of the auto debt bubble and wealth effects spending, main street America has nothing to spend but its wage and salary income. And, as is well known, that has been going nowhere ever since the Fed starting pumping its latest bubble.
Unfortunately, the MSM had such a severe case of “recency bias” that it does not even appreciate the profound implications of that unassailable fact. So here you have it in historical perspective. After 60 months of “recovery” from the official end of the recession, real hourly compensation is up by less than one-half of one percent.
It is off the charts compared to all prior experience. And, as they say, not in a good way.
wg7
It is said that Yellen’s labor market dashboard contains 19 different graphs. But you can bet that this one is not among them.
You can also bet that our mad money printers have no clue that today’s retail report was far worse than the headlines proclaimed. They have pumped the auto debt bubble about as far as it can go; and the bars and restaurants are more than saturated with spending from “wealth effects” beneficiaries who do not have many windfall gains yet to harvest.
So when retail sales continue to roll-over in the months ahead, don’t expect our monetary central planners and their bullhorns on Wall Street to have the slightest clue as to why.
@Admin: I used to buy a Powerball when it was over $ 100,000,000. But now they want $2 for a fucking ticket! Used to be $1.
I makes absolutely no sense: they doubled the price, and decreased the odds of winning, so they could give bigger payouts. What does one really need with $100,000,000 – I’d rather play a game where the odds of winning are greater. Most folks would be satisfied winning $500,000 – $100,000,000.
You nailed it again.
I believe that failure to file taxes remains a misdemeanor punishable by up to a fine of $25,000 and/or a year in jail. Generally, as of late, this penalty has not been enforced. Used to be they prosecuted a few old ladies each year in order to send a message.
It is an extremely bad idea, in my opinion, to publicly 1) identify yourself, 2) broadcast that one will be breaking a law that can carry a term of incarceration, and 3) admit to having falsified previous returns. Occasionally, just occasionally, folks live to regret that. But the ones that do really regret it.
Case in point is the mother currently being prosecuted for helping her son with cannabis oil. On occasion, the long arm of the law reaches out just because it can. And trust me, the IRS is not an arm you want reaching out.
Thanks, Admin.
Dutchman – you would have a better chance of winning betting you will be hit by lightning. You could even sell tickets and stand out in the open during thunderstorms. Buying lottery tickets is a mug’s game.
I did my part in the failure to boost Christmas retail spending.
I collected cash from my son who wanted to buy me a present, $140. I added $110 to that I had saved out of my household budget, and sent it to my parents who are old, sick, and broke. $250 cash in a Christmas card.
Outside of that I spent five bucks on Christmas presents and bought one ham.
But here is where our money is going:
-Increased medical expenses
-Increased taxes
-Parent Plus student loan from 10 years ago that has been in default
-Increased household utility costs
And we don’t even have a car.
I don’t know where they expect me to find money for ‘consumer spending’. What fucking world do these people live in?
The US economy no longer produces anything tangible.
So that means there are less jobs fro plumber,electricians, advertising, printers and other manufacturing support jobs.
You cannot have an economy base don just consumer spending.
So until Chinese wages rise substantially and Amercia starts making stuff again, the economy will carry on the way it is.
Part time low paid casual jobs.
With the “elite’ teachers, doctors, nurses all on full pay and benefits.
Initial Jobless Claims Surge Above 300k, Highest Since June 2014
Submitted by Tyler Durden on 01/15/2015 08:37 -0500
Tumbling retail sales and now surging jobless claims… perhaps the “low oil is awesome” narrative is not true after all. Initial Jobless claims surged to 316k (smashing expectations of 290k) and has not been higher since June 2014. The BLS reports no unusual activity – so economists can’t hust shrug this one off. Details on state-by-state job losses are lagged a week so we will not know if this is Shale Oil region-related but yesterday’s Beige Book and day after day of announced job cuts by the energy sector suggest it is.
Further signs:
Target Exits Canada
Despite what it characterized as a better than expected holiday sales period for the company in general, Target Corp. today announced its intention to exit Canada. The company expects to report approximately $5.4 billion of pre-tax losses on discontinued operations in the fourth quarter of 2014, driven primarily by the write-down of its Target Canada investment, along with exit costs and disposal activities as well as quarter-to-date Canadian segment operating losses.
Target also has announced that that it obtained an initial order from the Ontario Superior Court for creditor protection under the Companies’ Creditors Arrangement Act. The initial order authorizes Target Canada to begin a court supervised wind-down of its Canadian businesses and provides a broad stay of proceedings against the company, the retailer declared. It also authorizes Target Corp. to provide a debtor-in-possession credit facility of $175 million to finance Target Canada’s operations during the CCAA proceedings.
Target stated that it expects to report approximately $275 million of pre-tax losses on discontinued operations in fiscal 2015. The company added that it expects to realize cash costs of $500 million to $600 million as it discontinues Canadian operations. Target insisted that it has sufficient resources to fund the expected costs.
Thinker
Just an honest $5.4 billion mistake by the Target Executives who opened their 1st Canadian store in 2013. It’s all good. The stock hit an all-time high today after the announcement. The CEO will get a $10 million bonus for a job well done.
From Admin’s David Stockman article in the comments, “…The 6% growth in the food and drink category reflects a second artifact of the Fed’s money pumping binge. When it comes to actual dollars spent in bars and restaurants it is not the median income household—-still 7% below its real income level of 2007—that has been splurging on an extra night out at Red Lobster. The truth is, its the affluent top 20% of households which drive the cash registers….”
In driving by restaurants around here, no it is not.
The high end restaurants are running specials, yes SPECIALS, from here to downtown D’toilet and back. A restaurant that averages over $100 tickets for “romantic” dinners has sent out buy one get one free coupons. That didn’t happen back during our “one state” recession.
The big box restaurants, Olive Garden, Red Lobster and the like (I am soooooo curious as to their quarters, did sales growth outpace food and regulatory inflation?) seem to be bulging full a lot of nights.
They are full of people on disability and other minimum wagers with health problems and food stamps.
You see these people have been gifted 100% FREE, great health care, with 100% free dentists, pills and specialists galore. Plus foodstamps. Plus their kids’ checks, plus their kids’ free school breakfasts and lunches plus many districts are now sending food home with the kids for the weekend. I shit you not.
I’ve noticed a dramatic uptick in our cud-chewing, pretty obviously sucking disability, landwhales eating out. My guess is they no longer are using their disability payments to buy insulin or food for the home/their kids, instead they get that free and hundreds “extra” to spend at places like OG.
The non-recovery, or recovery of the government and elite, is beginning to show signs of ending (Tiffany’s, high end stores, high end neighborhoods) and some of the “middle class” will show happy signs as our poor waste what little they have on corporate, overpriced, poisons in portions large enough to feed small villages. At least I know this is temporary, as prices and regulations rise there is no way the government provided for disenfranchised will see their paychecks keep up. Now are the good days for them. And they are too stupid to realize it, capitalize on it, nor enjoy it.
@Hope, good for you girl! I was looking at myself in my sweater this morning. My stomach is at least three inches smaller than this time last year. The biggest difference is that I have embraced natural, nonmolested, fats and cut back more on the carbs. I continue to struggle with daily exercise, though I am nearly habituated to a five minute daily stretch. Contrary to a lifetime of medical and food company advice, this seems to be working great for me as my metabolism and energy levels seem to have recovered, while my ass and tummy has lifted and really started to disappear.
And I can still eat the occasional slice of blueberry pie with full-fat, homemade whipped cream. Starvation and deprivation is no way to live, nor will the vast majority ever be able to. Not to mention it isn’t healthy long term.
I can only bet how disheartening an aware to the world doctor would feel in our modern paradigm. I don’t get it Hope, not at all.
My aunt died last spring, it turns out she died from “unknown breathing complications,” where she was provided extra doses of antihistamines/anti-allergy, plus antibiotics. From first doctor visit to death was less than 4 months.
Normally I would have blamed this on her age (71), or something else (never smoked, never worked in air toxic environments, never did drugs, never drank), but the letter from my uncle shocked me.
She was told to take twice the normal dosage of Zyrtec-D. Her breathing got worse and worse and worse.
Instead of reading the damned contradictions and SEEING the #1 “side” effect of Zyrtec is “Upper Respiratory Infection,” the damned doctors and hospitals KILLED her.
The saddest part is they refuse to acknowledge it, refuse to suggest patients with newly onset breathing issues stop taking it until their bodies clean out, they double down and then sit prescribing more and more dangerous pills while shrugging their fucking shoulders.
Had I not accidentally figured out this exact same issue back in ’01, they probably would have killed me too, while blaming it on smoking! It wasn’t the smoking, it was the prescriptions that were allegedly making be better. I thank God all the time about that one, all the damn time. They would have killed me had I not figured it out for myself as my blood oxygen level was plummeting weekly, and nothing was helping until the day I quit taking their fucking pills.
I don’t know how anyone with an ethical, moral, Christian, bone in their body can continue to enable that system. How far we have fallen from “first do no harm.”
I pray for you dear. Pray that god helps you find a way to his natural state of health and grace. Learning to cook from scratch and grow our own foods goes a long way towards that. Which is the exact reason why the law is already in place to shut down our home gardens and farms. Hide your seeds with your ammo, that would be my suggestions…lol
I still have far to go and much to learn, but damn if I don’t feel better every day even though I am still within this journey.
Good to see you around Hope!