Disposable income – The Burning Platform

My Scary Chart

Jim Cramer and the rest of the captured MSM, along with their Wall Street puppet masters, captured political snakes, and crony capitalist corporate chieftains will tell you to ignore this scary chart. It’s different this time. The Fed has your back. The economy is booming. Stocks for the long term. Where else are you going to put your money? Trust us.

AND IT’S GONE!!!!

Guest Post by Daniel Thorton

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I published the graph below in a recent essay titled, Why the Fed’s Zero Interest Rate Policy Failed, but the graph deserves special attention because of what it seems to imply for the economy going forward. The graph shows household net worth (wealth) as a percent of personal disposable income. Household net worth as a percent of disposable income increased dramatically in the mid-1990s. Its collapse precipitated the 2000 recession. It increased even more dramatically during the subsequent expansion only to collapse again, precipitating the 2007 – 2009 recession.

Once again, household net worth has increased dramatically. Since the end of 2012 it has increasing by nearly 100 percentage points to 640% of disposable income. This is scary; not just because it is an incredibly large rise in wealth in a short period of time, but because it happened twice before with very bad consequences.

Continue reading “My Scary Chart”

Personal Spending Misses Expectations By Most Since January, Income Juiced By Government Handouts

The government extracts money from the pockets of producers and hands it out to the 100 million non-working consumers and then publishes propaganda data reports announcing strong growth in personal income. The MSM unquestioningly regurgitates the lies and the Wall Street shysters cheer.

The last chart is a doozy. Real disposable income per person has barely budged in the last 8 years. And that is using the manipulated, massaged, seasonally adjusted, excel spreadsheet tweaked BLS bullshit CPI figure that is understated by at least 3% to 5%. In reality, the average person has far less real disposable income than they had in 2007. The non-average people in the top .1% are doing just fine.

Do you think this lack of real disposable income might have something to do with the crash in retail store sales and profits and the ongoing recession for most Americans? It might have something to do with the rise of Trump.

Submitted by Tyler Durden on 08/28/2015 08:39 -0400

While the headline spending and income data consists of marginal moves, personal spending missed expectations by the largest amount since the dismal weather-strewn days of January. Consumption rose 0.3% in July, less than the 0.4% expectation and flat from the 0.3% June print. Income rose 0.4% – in line with expectations – ticking up YoY to 4.3% 0 juiced by a $13 billion government transfer receipts print – the most since March. The savings rate ticked up once again as those darned consumers refuse to spend as the elite demand.

Spending missed hopeful expectations by the most since January…

Continue reading “Personal Spending Misses Expectations By Most Since January, Income Juiced By Government Handouts”

CONSUMERS NOT FOLLOWING ORDERS

Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing.

The ultimate mouthpiece for the banking cabal, Jon Hilsenrath, who does the bidding of the Federal Reserve at the Rupert Murdoch owned Wall Street Journal, wrote an arrogant, condescending, putrid diatribe, directed at the middle class victims of Wall Street banker criminality and Federal Reserve acquiescence to the vested corporate interests that run this country. Here are the more disgusting portions of his denunciation of the formerly middle class working people of America.

We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you.

We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite counter-tops.

You should feel lucky you’re not a Greek consumer.

Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates.

We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.

Please let us know the problem.

The Wall Street Journal was swamped with thousands of angry responses from irate real people living in the real world, not the elite, QE enriched, oligarchs living in Manhattan penthouses, mansions on the Hamptons, or luxury condos in Washington, D.C. Hilsenrath presumes to know how the average American has been impacted by the criminal actions of sycophantic Ivy League educated central bankers and their avaricious Wall Street owners.

Continue reading “CONSUMERS NOT FOLLOWING ORDERS”

Here Is Why Americans Are Suddenly $80 Billion “Poorer” (In Some Government Spreadsheet)

The government is a fucking joke. If the unemployment rate has really plunged from over 10% to under 6% in the last few years, how can disposable personal income be so pitiful?

The government statistics fed to the sheep and unquestioningly reported by the six mega-media outlets are nothing but, lies, propaganda and bullshit.

Open your eyes to see the truth. Look at the decaying office buildings, strip malls, and small manufacturers as you drive our decrepit roads. Look at your own financial situation. Are you better off than you were in 1999? I doubt it. Are you experiencing too little inflation? Is your paycheck going up at a rate higher than the true rate of inflation?

The US Titanic is sinking and you are locked below deck, while the .1% head for the lifeboats and the MSM band plays on.

Submitted by Tyler Durden on 11/26/2014 09:33 -0500

The final major datapoint of the day was the Consumer Income and Spending data from the US Dept of Commerce’s Bureau of Economic Analysis, the same outfit that yesterday shocked everyone with just how much better US GDP was. Well, today, we learned just where the offset came from. Because while on the surface, both income (+0.2%) and spending (+0.2%) missed expectations of a 0.4% and 0.3%, respectively…

… it was the revised data that the US department of data fudging once again showed why it has long since surpassed China.

Behold what is perhaps the most important data series in all of US eco: Disposable Personal Income. We say behold, because there are some rather massive variations between what the BEA reported a month ago, and what it reported today, as relates to all the data issued since March. To wit:

Essentially, the just reported Disposable Persona; Income print of $13.109 trillion as of the end of October, is where according to the old, unrevised data US houshold income was some time in August. Whatever happened to two months of income?

Which brings us to the other all important number: the personal savings rate. At just reported at 5.0%…

… something strucks us: this number was reported at 5.6% last month.

And sure enough, since Disposable Personal Income flows into personal savings, net of outlays, it was clear that American savings would be dramatically impacted as a result of the massive data revision.

Sure enough, this is how the US personal savings rate looked like based on the old and just revised data.

And, the punchline: US savings in absolute terms, an $80 billion decline in savings from the old September print and the latest, post-revision.

So there you have it: in order to “suggest” that the US economy had grown by a far greater than expected run-rate, the BEA was forced to revise away personal income, and “assume” these had instead been invested in the US economy, in the form of a surge of durable goods purchases. Sure enough, while both incomes and savings tumbled, spending magically surged:

So if that “statistical” amount of money you thought you had saved in the BEA’s savings.xls spreadsheet just dropped by 10%, fear not dear Americans: it was all used for a good cause: to fabricate a much stronger than expected Q3 GDP number.

Source: BEA

TWO CANARIES IN THE CONSUMER COAL MINE

First we have good old Darden Restaurants, purveyor of processed slop to the obese endless bread stick addicted middle class. They pre-announced that they will lose $20 million this quarter. It seems the problem was not just their recently shit canned Red Lobster division. If there really has been excellent job growth as we have been told by Obama and the MSM, why does traffic continue to plunge at the formerly popular Olive Garden and Longhorn Steakhouse? All those great jobs must translate into wage increases and disposable income. Right? The results of this middle class dining chain, along with the continued decline in McDonalds sales are a canary in the coal mine. The middle class has run out of disposable income and is no longer disposing of something it doesn’t have.

Look at the numbers in those charts. Look at how much lower the traffic is than total sales, particularly for Longhorn. Do you know what that means? Longhorn is a steakhouse. Beef prices are at all-time highs. These restaurants are jacking up prices big time. So not only has the middle class run out of disposable income, but real inflation in the real world is raging.

I had never heard of Conn’s until this morning. They are evidently a Texas based retailer with 86 stores selling appliances, furniture and electronics. They have been growing rapidly and opening stores at a healthy clip. They grew their sales by an amazing 29% over last year, with an 11% increase in same store sales. Wow!!! They must be a real sales juggernaut. Well not quite. Their stock dropped 29% this morning.

You see they are another canary in the coal mine of how hard goods retailers and car companies have generated fantastic sales in the last couple years. Subprime and 0% interest debt peddled at prodigious rates to anyone that can breath and scratch an X on a loan document can really juice the top line for awhile. But guess what? The ignorant masses with no jobs actually have to make the payments for it to work out in the end.

It seems Conn’s has generated all of their fabulous sales with 0% deferred plans made to questionable credit worthy customers. Their portfolio of credit receivables grew by 40% while sales grew by 29%. It seems when you make loans to people incapable of paying you back, they eventually default. The delinquency rate is soaring on their $1.2 billion portfolio. Bye Bye profits.

This is the same sale strategy used by the big automakers over the last two years. Those fantastic sales have been a fraud. The bad debt avalanche has just begun. You need income to eat out and you need income to make the debt payments on those 52 inch HDTVs. The middle class is tapped out and more debt will not cure what ails them. The canary is dead.

Darden Announces Expected Fiscal First Quarter Results

ORLANDO, Fla., Sept. 2, 2014 /PRNewswire/ — Darden Restaurants, Inc. DRI, +1.61% today reported that it expects diluted net loss per share from continuing operations for its fiscal first quarter ended August 24, 2014 to be approximately 13 to 15 cents.

Darden also reported that preliminary U.S. same-restaurant sales for the fiscal first quarter by month for Olive Garden and LongHorn Steakhouse were as follows:

Olive Garden	June	July	August
Same-Restaurant Sales	-1.0%	-4.2%	0.8%
Same-Restaurant Traffic	-0.9%	-4.3%	-2.3%

LongHorn Steakhouse	June	July	August
Same-Restaurant Sales	3.3%	1.5%	3.2%
Same-Restaurant Traffic	-1.1%	-1.6%	0.2%

Conn’s, Inc. Reports Second-Quarter Fiscal 2015 Financial Results

THE WOODLANDS, Texas, Sep 02, 2014 (BUSINESS WIRE) — Conn’s, Inc. CONN, -28.62% a specialty retailer of furniture, mattresses, home appliances, consumer electronics and provider of consumer credit, today announced its financial results for the second quarter ended July 31, 2014.

Credit segment operating income declined $7.7 million to an operating loss of $0.2 million;
• The percentage of the customer portfolio balance 60+ days delinquent increased 70 basis points sequentially to 8.7% as of July 31, 2014;
• Credit segment provision for bad debts on an annualized basis was 13.9% of the average outstanding portfolio balance in the current quarter and 11.1% on an annualized basis for the first six months of fiscal 2015;
• Diluted earnings was $0.48 per share, compared to $0.52 per share in the prior year;
• Adjusted diluted earnings was $0.50 per share, compared to $0.52 per share a year ago; and
• Full-year fiscal 2015 guidance was updated to a range of $2.80 to $3.00 adjusted earnings per diluted share. The new full-year guidance reflects primarily the impact of higher expected provision for bad debts and the issuance of $250 million in 7.25% senior unsecured notes in July 2014.

“Overall results were not satisfactory. Our credit operations ran into unexpected headwinds, resulting in portfolio performance deterioration. Despite tighter underwriting, lower early-stage delinquency and improved collections staffing and execution, delinquency unexpectedly deteriorated across all credit quality levels, customer groups, product categories, geographic regions and years of origination. Tighter underwriting and better collections execution did not offset deterioration in our customer’s ability to resolve delinquency.

“Delinquency rates improved through May and increased modestly in June, consistent with typical seasonal trends. However, over sixty-day delinquency rates unexpectedly deteriorated a combined 90 basis points in July and August. We now expect future 60-plus day delinquency to increase to levels above our historical highs in the third and fourth quarter of fiscal 2015. Early stage delinquency remains lower than historical averages through August.

“We have made additional minor changes to tighten underwriting in August. Over time, more of the total portfolio will have been originated under the tighter underwriting policies implemented in late fiscal 2014 and early fiscal 2015. Declining sales of electronics as a percentage of total sales, slower expected originations growth and an expected reduction in the percentage of originations to new customers should also benefit future portfolio performance. Longer term, we believe the changes necessary to optimize portfolio performance are in place, although we may not return to credit loss rates of prior years.

“In response to higher delinquency, we are reducing the level of no-interest programs and raising the interest rates in some markets to increase portfolio yield.

SPIN BABY SPIN

The consumer is back baby. The MSM is gaga over the “surge” in August spending, driven by subprime 7 year 0% auto loans to pimps and hos in West Philly. Maybe the University of Phoenix dropouts are using their student loans to buy iGadgets and bling. Here is a link to the “fantastic” data:

http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

I just can’t help myself. Let me take a look at the data and give you a few FACTS you may not see in the MSM spinfest:

Real disposable personal income, using the fake BLS inflation numbers, is up a HUGE 1.6% in the last year. In reality, using inflation numbers from the real world, real disposable income has declined. This is consistent with the FACT that retailers are reporting negative or flat comp store sales.
Real disposable income per capita was up an even more pathetic 1% in the last year, as the country’s population grew by 2.2 million people.
To give you some perspective on how the average person (not a Wall Street asshole) has progressed in the last five years, the real disposable personal income per person in May of 2008 was $37,584. Today it is $36,357. The average American, after the four year Obama recovery, has 3.3% LESS disposable income.
Americans have been forced to REDUCE their savings by $22 billion in the last year to just make ends meet in this fantastic economy. Three cheers for a near record low savings rate.
Personal income is up $500 billion in the last year, but in this warped Orwellian world we live in, only 50% of this is generated by wages paid by businesses to workers. The $2.4 trillion per year taken out of your pocket or borrowed from future generations and handed out to the non-producers in this country is hysterically counted as personal income.
You’ll be thrilled to know that dividend income paid to the .1% is up by $71 billion in the last year, while interest income paid to senior citizens and savers is virtually flat and down $150 billion since August 2008. Over this time, Bernanke has stolen over $400 billion from savers and handed over to his puppet masters on Wall Street.
Great news for Obama and the government drones in DC. They have sucked $172 billion more in taxes from you compared to last year. Bye Bye payroll tax cut. I’m sure they’ll put the money to good use funding more IRS agents to enforce Obamacare.
The American consumer is back. Their disposable personal income was up $336 billion in the last year and they spent $359 billion of that. Oops!!! How long can you continue to spend more than you have? I guess we’ll find out.

Good bye from the NO SPIN zone. I hope you liked my daily dose of reality.

Consumer spending bounces back in August

Faster pace of outlays suggests economy hasn’t slowed all that much

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — Consumers opened up their wallets in August and spent more in July than previously reported, suggesting that U.S. growth might not soften quite as much in the third quarter as economists had forecast.

Consumer spending rose a seasonally adjusted 0.3% last month, marking the third-fastest increase of the year, the Commerce Department said Friday. And spending in July rose twice as fast as initially estimated –— 0.2% instead of 0.1%.

The rise in spending was aided by the biggest increase in worker earnings in six months. Personal income jumped 0.4% in August.

Economists surveyed by MarketWatch had forecast a 0.3% increase in consumer spending and a 0.4% rise in personal income.

The larger increase in incomes allowed Americans to salt away a bit more cash. The savings rate of Americans rose to 4.6% from 4.5%. The savings rate, however, hasn’t topped 5% since late last year.

Consumer spending represents as much as 70% of the U.S. economy and is the biggest influence on growth. The bounce-back in spending could generate faster growth in the third quarter than economists had been expecting. Gross domestic product is forecast to rise 1.9%, down from 2.5% in the second quarter, according to the latest estimates.

Consumers boosted purchases of autos in August to the highest rate in more than six years, and the month is always big for back-to-school purchases. Americans spent more on durable goods and services, but purchases of everyday items was basically unchanged.

Inflation, meanwhile, edged up 0.1% in August based on the latest reading from the personal consumption expenditure price index. The core rate, which omits food and energy, rose a slightly faster 0.2%.

Both PCE indexes have risen a scant 1.2% over the past 12 months, indicating that inflation remains contained. That gives the Federal Reserve the room to continue its a massive bond-buying program meant to stimulate the U.S. economy.

The Fed surprised Wall Street earlier this month by maintaining its current rate of purchases. A big reason was the apparent slowdown in economic growth and hiring toward the end of the summer.

Yet a slew of recent indicators, including the consumer spending report, suggest the economy has not slowed all that much from the spring. The U.S. grew at a 2.5% rate in the April-to-June period