Both Zero Hedge and TBP have been saying we are in a recession for months, if we ever really left the first one. Now the official talking heads are confirming the fact for the mindless masses. Then this morning, we get confirmation of how bad things really are. Personal income, consumption and savings rate information was reported. I love to ignore the press releases and go right to the data. Here is the link:
http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1
Here are my observations:
- Wages and salaries are actually falling, and when you take into account inflation they are falling hard.
- Interest income continues to fall as Bernanke destroys the lives of millions of senior citizens dependent upon interest income.
- It still cracks me up that government transfers from the productive in society to the unproductive is considered income in their calculations. Government transfers are now 18% of all personal income.
- Disposable income has declined, but spending increased, so the savings rate is in rapid decline to 4.5%.
- Americans are still spending $10.8 trillion per year, or 72% of GDP. Remember the storyline about Americans becoming austere and reducing their spending? Total bullshit. This consumer society will go down in flames before Americans put away their credit cards.
- Consumer debt is rising, so people are making up for their declining income by using their credit cards. That can’t possibly go wrong again. Right?
Sorry folks. I know it is supposed to be fun Friday, but this baby is going down. Anyone with their eyes open can see the disaster before their very eyes.
ECRI’s Achutan Says US Is “Entering A New Recession”
Submitted by Tyler Durden on 09/30/2011 07:59 -0400
Last year the ECRI index was the bete noir leading indicator of the market: while the index clearly indicated the US had entered a recession, its creator Lakshman Achutan consistently refuted the findings of the index, instead pushing a contrary view that the US was in fact growing. Then came QE2 and with it s 9 month suspension of reality. That time is over, as is Achutan’s ongoing attempt to deny facts. As of a minutes ago, the ECRI’s head told Bloomberg Radio that the U.S. is “tipping into a new recession.” “He added: “We don’t make these calls lightly. When we make them, it’s because there’s an overwhelming objective message coming out of our forward-looking indicators. What is going on with the leading indicators is wildfire; it’s not reversible.” As Zero Hedge first said months ago, when it finally extracts its head from between its gluteui maximus, we expet the NBER to proclaim the re-recession as having started in June/July.
We will get the Bloomberg Radio interview as soon as possible.
US Consumer Taps Out: Personal Savings Rate Drops To Lowest Since December 2009
Submitted by Tyler Durden on 09/30/2011 08:44 -0400
The August Personal Income and Spending report is out and while there were some modest surprises in the data, namely a drop in Personal Income of -0.1%, on expectations of an increase of 0.1% (and an adverse revision for July data from 0.3% to 0.1%), while Persona Spending was in line with expectations at 0.2% (previous revised from 0.8% to 0.7%), the biggest news of the day is that the US consumer is getting tapped out, with spending coming entirely from savings: the savings rate dropped from a revised 4.8% (previously 5.0%), to 4.5%, the lowest since December 2009.
August income components are not pretty, in fact they were pretty damn ugly:
Private wage and salary disbursements decreased $12.2 billion in August, in contrast to an increase of $23.8 billion in July. Goods-producing industries’ payrolls decreased $1.3 billion, in contrast to an increase of $6.3 billion; manufacturing payrolls decreased $2.9 billion, in contrast to an increase of $5.8 billion. Services-producing industries’ payrolls decreased $10.9 billion, in contrast to an increase of $17.5 billion. Government wage and salary disbursements increased $0.4 billion, in contrast to a decrease of $1.8 billion.
And what is even worse is that based on other personal income, the primary source of “income” was and continues to be the squatter’s rent where not paying one’s mortgage effectively translates into income:
Rental income of persons increased $8.3 billion in August, compared with an increase of $8.1 billion in July. Personal income receipts on assets (personal interest income plus personal dividend income) decreased $5.7 billion, compared with a decrease of $5.8 billion.
Lastly, the government was not very generous last month: the result – a tapping of consumer bank accounts.
Personal current transfer receipts decreased $7.1 billion in August, compared with a decrease of $10.7 billion in July. Government social benefits to persons for Medicaid decreased $10.5 billion, compared with a decrease of $13.6 billion.
Dave Doe says:
I don’t think this suprises anybody working out in the real economy. I work in technical services and wages have been deflating since Sept 2008 when Lehman collapsed.
What’s amazing to me is how long Washington and Wall Street have been able to extend and pretend (mostly pretend).
Look for some event to trigger “Deus Ex Machine”. They have few options left.
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30th September 2011 at 11:30 am
AWD says:
One post saying middle class income has declined by 7% over ten years, and another saying consumers continue to spend. By Christmas, the mass spending orgy holiday, all savings and credit card limits will have been reached. 2012 does not look like it’s going to be a very good year, especially for emperor Obama.
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30th September 2011 at 12:47 pm
KaD says:
On your point five above; I wonder if the spending is still on discretionary goods (like tv’s) or if consumers spending has switched to more necessities (food, rent, gas).
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30th September 2011 at 12:51 pm
Administrator says:
KaD
Spending is flat on discretionary stuff and up on the things we need like food and gas.
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30th September 2011 at 1:31 pm
Dave Doe says:
JIm, Have you seen any analysis which projects how fall GDP needs to fall to rebalance the economy without a 10% GDP Government Deficit (inherent stimulus). That is where we really need to go to be sustainable and it won’t be pretty.
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30th September 2011 at 1:56 pm
Smokey says:
?
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30th September 2011 at 2:00 pm
Colma Rising says:
I can tell you now that we are in a recession by the volatility of my own work load. Call it the Colma Rising Hours Indicator.
Take today, or this week for that matter…. Slow slow slow. Funny thing is that there’s a back-log of work, many things to do but we’re waiting on factors like different subs drawing out jobs (an indication of workers milking a job for hourly pay), people waiting for cash to pay as opposed to credit (an indication of unwillingness/inability to borrow), bid approval versus the normal “go ahead, we know you have it” on jobs, general grumpiness and rage in day-to-day interactions, etc….
Like the markets, one week will be hell with 10 hour days resulting in Colma Rising stinking up the class at night as I rush to school, the next week will be early days with Colma Rising catching up on homework and smelling fresh as a glacier.
In ’06-’07, the same happened and I freaked and paid my debts and went into living poor and socking away the extra… a couple years later the sky was falling and morons realized we were already in a recession. Going by that experience, we’re heading back to reality (at least the common sheeple-dope is).
Hope you all don’t owe anyone shit, you’ve braced for capital preservation and stocked up on necessities for at least a 3 month burp because I smell slow-down.
“Dees time por reel”
-Unknown Day Laborer
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30th September 2011 at 2:26 pm
DavosSherman says:
With 22% unemployment and 46 million + on food stamps I’m going to be the resident realist/dooms-day-er and say: It’s a depression bitchez!
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30th September 2011 at 3:40 pm
Muck About says:
We never got out of the first one. Pissing on debt liquidation with printed money always confuses the rubes until they find themselves running out of food before the end of the month.
Debt? nope/check
Grub? yep/check
gold? none of your business
guns? yep/check
nice tight nit community? yep/check
Now we’re just hanging out waiting to see who goes busted first and how far it drags everyone else down.
Have a nice evening, Davos…
MA
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30th September 2011 at 5:09 pm
King-Shat says:
I just know that the sky is going to fall some day. I just know it. And there will be a terror attack by the end of the month.
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30th September 2011 at 5:12 pm
DavosSherman says:
U2 MA
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30th September 2011 at 5:43 pm
Dave Doe says:
Let me restate my question. (Smokey is just waiting to jump all over my shit)
If Government runs a $1.5T budget deficit , that’s $1.5T that needs to come out of the economy
to balance the budget and reach some level of sustainable federal and consumer spending.
That’s going to adjust GDP downward. If nothing else changes (which I know is impossible – it’s a thought exercise) then GDP should be sustainable at some lower level. Say 90% of current GDP.
There is no commonly accepted definition of a depression. But, 10% below where we are now will look pretty ugly (15% unemployment, 65 Million on SNAP).
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30th September 2011 at 6:06 pm
DavosSherman says:
Dave:
I think SNAP is about 46+/- million. That is a modern day bread-line.
I don’t need to tell you that our customer remains challenged…You need not go farther than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m. customers start to come in and shop, fill their grocery basket with basic items – baby formula, milk, bread, eggs – and continue to shop and mill about the store until midnight when government electronic benefits cards get activated, and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.
http://www.zerohedge.com/article/wal-marts-ceo-provides-starkest-visual-modern-bread-line-yet
While there is no real definition of a depression it is pretty commonly accepted that unemployment of 25%, and or 2 consecutive quarters of GDP decline is a recession while a 10% or greater decline in GDP is a depression.
The problem, as you know, is how they cook the GDP numbers.
http://www.chrismartenson.com/crashcourse/chapter-16-fuzzy-numbers
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30th September 2011 at 7:09 pm
TeresaE says:
We went out to our favorite little Mexican restaurant tonight. Open tables.
It is about five/six miles away and we take a main retail thoroughfare to get there. THREE restaurants and a couple little stores have died since the last time we went three months ago.
My brothers-in-law just sold three industrial buildings in Detroit-for less than the buildings were purchased for in the seventies – shuttering a factory that had three employees left, laying off all their remaining employees except two. Ten non-counted people just lost their jobs and a multimillion dollar business has radically downsized. I believe they are looking to shrink below $400k a year, they were doing that in two months only four years ago.
There has been NO recovery, contrary to what so many – now stunned – believe. I see no way that small business will not continue contracting – it is just too expensive, and frightening, to continue on.
US small to mid-sized businesses USED to create 70% of all “private” jobs, the SBA now states they create 45% of the jobs. So, the little guys quit creating the bulk of the jobs and the big guys offshored even more. Yet so many believe we have “recovered.” Or they believe in the new propagandized bullshit of “slow growth.”
We are being shoved into something very ugly while CONgress and the unions party like it is 1999.
Besides, we have to “enter” a recession to make it politically palatable to officially call QE3. Print, print and print some more, to try to plug the holes created by a government gone wild.
Ponzi on America, Ponzi on.
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30th September 2011 at 7:36 pm
Muck About says:
@TE: Ain’t it a shame… To solve the problem, state and federal govt. will increase regulation on small business to force higher wages, more mandatory insurance coverage, high and longer unemployment benefits and whatever they can think of that makes it harder – nay impossible – for small business to hire.
Then the edifice comes crashing down as the only employer becomes the government itself – bereft of tax income from small business – so it becomes a system of rape anyone who can create a dime to benefit all those who destroy money.
I’m glad I’m to the point I can be objective and see exactly what you describe and accept it as the picture of the downward spiral in which we find ourself.
I think I’ll have another beer before bed time! Thanks..
MA
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30th September 2011 at 8:11 pm
Dave Doe says:
Interesting Inteview With David Stockman on CNBC. This will get ugly .. no news to TBP members.
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30th September 2011 at 10:31 pm
Dave Doe says:
Link – cannot embeded – sorry.
http://video.cnbc.com/gallery/?video=3000048484
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30th September 2011 at 10:31 pm
TeresaE says:
MA, when I first saw the change in the stat I was drowning in auction flyers from customers, vendors and other manufacturers, reps, distributors, wholesalers, machine builders, from coast to coast.
As the entire country feasted on zero interest credit cards, 110% home equity loans and ‘Flip This House.’
Very, very few believed me, after all stocks were up, profits of the companies remaining up, things were great! Yet, the rot had set in.
Now it is just growing.
I firmly believe that the individual mandate for Obamacare is because the government knows exactly what they are doing to the middle class. Preparing for the transfer of burden from former employees to self-employed.
Because there are so many self-employed, next up they will force them to buy workers comp, unemployment and pay full boat social security; there is no other way the bullshit can continue.
Black market will soon be normal. Fun times.
I second your beer.
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30th September 2011 at 11:44 pm
DavosSherman says:
Dave, that video needs to be posted, if you can’t post tag me back and I’ll toss it up there.
“this is crazy. wr this interest rate is. when we tell congress that can you borrow five-year money for 1%, two-year money for 30 basis points, why in the world is anybody going to fall on the budget sword? therefore, we have a political system incapable of dealing with the fiscal issue. it’s just going to keep festering and ballooning. and some date bond market is going to wake up the real two traders that are left. please call us if you’re one of them”
+1!!!
And the best one: “The bond market is broken, busted by Ben Bernanke.”
+1!!! Fucking awesome.
Other than Ron Paul and just a handful of good eggs, guys like Stockman don’t exist anymore. I wish to God that other ex leaders had the balls to speak up like that.
David Walker, another guy cut from the same fine cloth said that our biggest deficit is a leadership deficit. Watching that video emphasized that, this guy was a leader, now we have fucking douchebag morons who couldn’t lead their way out of a fucking paper-bag.
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30th September 2011 at 12:35 am
Opinionated Bloviator says:
No kidding. Anyone who can count past 10 without taking off their shoes or lacks a hopium pipe stapled to their mouth has figured it out months ago.
For those of us who understand math, the numbers are horrifying – spend 45% more than we earn, trillion dollar deficits forever, collapsing employment, housing prices… whats even scarier is they are getting WORSE at a FASTER rate.
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30th September 2011 at 2:01 am
Welshman says:
Bernanke stated a “national crisis with the unemployment level”. Well yes, the empire is dying.
For the last 15 years the country has been feeding on itself with ever increasing debt used to fuel growth, and now that is in reverse.
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30th September 2011 at 6:07 am
Muck About says:
That was a great video by Stockman.
Now I wonder why he couldn’t tell the truth when he was Director of Reagans’ Office of Mgt. and Budget.
It would seem that no one, while sucking up under the Fed’s paycheck umbrella, can utter the truth. When they divorce themselves from the paycheck, all of a sudden, the truth will out. The only exception I can find to this was Paul Volcker who bit the bullet while Fed Chairman and drove the country into deep recession to kill inflationary pressures in the early 80′s.
“Never too late” does not seem to describe his post-zombie epiphany. “To late too smart, to soon too old” is more like it.
MA
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30th September 2011 at 11:41 am
Novista says:
MA
I thought of an exception — Neil Barofsky. He learned that the truth will set you free …
http://www.nytimes.com/2011/03/30/opinion/30barofsky.html
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30th September 2011 at 7:26 pm