Tuesday, September 10, 2013
Utterly Schizoid NFIB Report
This is a strange report. On the one hand, there's a sudden collapse in three-month earning trends:
This is most unfortunate. Admittedly credit by historical standards is very easy to get and very cheap, but heading to the bank with your hand out with collapsing earnings is not a pleasant experience.
The reason for poor earnings is a sales collapse:
Remember when I posted that this all had a 2008 feel to it? This has made me twitchy, I can tell you. Note the high expectations for the future.
On the other hand, employment plans are soaring:
By far the best of the recovery. It may be that retirements are beginning to generate more hiring impetus. Inventories and sales don't support the hiring plans. There is a high retail/hospitality component to this report, and it may be that ACA changes are moving this indicator also.
Last month's report was one of the big samples, so the sudden change between last month's figures and this month's figures could partly be explained by that. But I have the wind up. Read the report for inventories - that indicator is not flamingly positive at this time.
NACM has been unnotable but decent with some improvement, but here I quote from the August report:
“ This bodes pretty well for the coming months , as long as nothing affects sales numbers drastically,” said Kuehl.Uh, yeah. I just went back and read NACM again to see if I had missed anything, and I hadn't. Consolidation was the name of the game, and that's positive.
I am stuck again on the horns of the dilemma with which I began the year. The actual on-the-ground change from the tax bill picks up strength through the year, and is accentuated by business and investment taxation changes which will tend to hit investment. The weakness in new home purchases I believed would show up at the end of the summer, and it apparently has.
So now we move into what is supposed to be the Fed taper sequence, yet I think it is very likely that they will find themselves either not tapering or beginning to taper and reaccelerating purchases. But what can they buy?
I did not expect to see this in NFIB. The next two months will be interesting indeed.
Update: One possibility for this somewhat confounding trend is that the student loan changes disrupted CC spending, and that this is therefore a temporary hit which will be somewhat redressed in the next few months. Student loans are being used to generate considerable consumer spending, but I don't know how much of a factor it is. Revolving credit hasn't been going much of anywhere:
The pace of student loans fell off this year because of the pending interest rate changes and perhaps declining enrollments. The eventual change in rates was actually highly favorable, so I expect that portion to turn around:
Utterly Schizoid NFIB Report
I saw the same thing in the gasoline station data. Why are they hiring when the fuel sales (by volume) per employee are falling?
Perhaps it is just assumed that we will drive more just because we *always* found a reason to drive more in the past? I'm not a believer.
It makes sense that hiring is increasing while sales and profit are declining, if we're just hiring more part-timers to keep everybody's hours under 29.
That's a full generation of declining earnings. And having spent my entire adult life in that time span it's pretty obvious to me that DC knows we have a structural problem and DOES NOT CARE. As long as a willing Fed papers over the reality DC is happy to play the post-boomers for suckers.
Sales expectations are good, so perhaps hiring plans are more related to expectations.
I always discount expectations in this report, because my experience shows that small business owners are relentlessly positive.
Perhaps the coasts are more optimistic than flyover ?
I'm dubious the regions will hit those numbers, but that's because I make Snarky Mark look like an optimist.
Here's a chart that might help explain your utterly schizoid NFIB report.
This "Recovery" Is Just About Over (Musical Tribute)
Start with retail sales. Subtract off motor vehicles and parts (mostly purchased with excess credit), gasoline station sales, food sales, and nonstore retail sales (since nonstores tend to hire non-employees). Adjust for inflation and divide by the population. The chart shows what's left. It's the perfect recipe for MaxedOutMama's disturbing Utterly Schizoid NFIB Report.