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Monday, August 20, 2012

Everybody Needs To Run Out And Buy Something

I'm serious. CFNAI. July was revised down.

You can't have CFNAI this low combined with stagnant or declining real retail sales without ensuing sorrow:

I added in the gas/diesel prices. I can see why retail sales are stagnating, but still....

It's Mark's fault. He should be out there spending his money and he doesn't. Some cheeping whining BS about wanting to have money when he's 75. He should throw himself into the spending fray.

It does raise questions about what the Fed can accomplish. Arguably, they normally make the consumer spending side worse with their interventions, which is why you see the oddity of gas and diesel prices rising in the beginning of a recession. If lower interest rates spark a consumer credit expansion, then they can overcome the tailwinds, but we're not really slated for that.

I have some more graphs, but they are depressing. I need to scrub stuff to be able to deal with this. I'll be back when I have run out of bleach. I bought one of those big containers this weekend, so don't hold your breath. Also two mops (the kinds that have the spray nozzle built in) and a range of other cleaning supplies.

Based on the M_O_M scrub-dex, this is going to be ugly. I also bought shoes and anything else I could think of, but frankly, I just don't have that much to throw into the pot. I haven't put 20K on the car I bought less than two years ago.

I'm seeing light staffing and light stocking in retail, and grocery stores look like it is keeling over. 

The problem is that entry-level salaries aren't going anywhere, and many are declining. And costs are rising. The bottom line is that we just haven't been able to accumulate the money this year for the expansive surge that we saw last year:
 Last year we collectively stuck a whole lot of dough in our checking accounts from June through the end of August, and it fueled holiday spending. This year we haven't been able to do that., and rising gas and basic food costs ensure that we're not going to be able to make it up by squeezing the daily dollar. 

We have been struggling with our CCs, but even that is worse relatively than it was last year:
One of the issues is services, especially insurance. Low returns are driving up insurance costs for understandable reasons, but it's another draw on the budget.

Nice site Maxedoutmama. I am like Frank. I only buy what I need too. Socking away cash is not getting any returns to beat inflation, but I am not investing in the stock market this year. Usually election years are great for making some money off of investments. This year it is different.
Just trying to be helpful, the zero line on the CFNAI index is calibrated to equal the historical growth trend. Below it doesn’t mean contraction until it gets really low. So. According to CFNAI, we are growing, but growing below historical trend. This isn’t flashing recession. Noting myself also, that the revisions are vicious. I have never seen anything like it and they revise many many month back each month. Really, you can only use the 3 month moving average and along with the revisions, one must view this index as lagging. I once had high hopes this could be a leading indicator. No longer do I see it that way. However, it does show what we already know which is that the economy is real slow.

If the M2 money supply which is mostly savings accounts keeps rising, what will they do to get us to spend that money? Light inflation? Then moderate inflation? Then high inflation?

Squire - yes, I was puzzling through the revisions myself this morning. Massive changes.

I normally look to forecast well in advance (remember, I'm really forecasting not GDP but income changes for the purpose of tracking loan cycles). Therefore it will be off in comparison to most indicators.

To me it looks like a real collapse.

I'm trying! Believe me, with two young children, I'm a pillar of the economy!

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