A Detailed Look At The Stratified U.S. Consumer

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Sat, 08/15/2009 - 19:34 | 37917 Cheeky Bastard
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fantastic paper; but the most staggering data point that i have found in it is the gap between the 10% of the richest and the rest of the country; silly me( being naive), and i thought it was something like 5x, 5.5x, but not 8x. great job TD.

Sat, 08/15/2009 - 20:48 | 37949 Cheeky Bastard
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yes, but trillions are the new billions so its all good ...

Sat, 08/15/2009 - 20:53 | 37953 Cheeky Bastard
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its 2:53 am here, but i woke up like two hrs ago and had 3 red bulls and a coffee so I'm all good. reading some news till the dawn breaks, and then of to scuba diving and catching some fish.

Sat, 08/15/2009 - 23:53 | 38047 Anonymous
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oh dear...seeds of class warfare

Sun, 08/16/2009 - 02:55 | 38098 Hephasteus
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Class warfare always exists. A person kept down through weapons or criticism or a person inflated through distortion or self agrandizing or self jusitification. The war is always being fought. It's only peaceful when one party isn't fighting back at that particular moment because the rich have a bullcrap that works.

Sun, 08/16/2009 - 09:59 | 38140 Anonymous
Anonymous's picture

i think it is big mistake to get caught up in anything like class warfare and racial warfare etc. if we do this, then we fall into the trap that is set. just remember. keep your eyes on the prize. just because someone is wealthy does not make them my enemy. just because someone is racially different does not make them my enemy. remember, enemies are made for you to fight. and while you are fighting these manufactured ememies, the real problem goes unsolved.

Mon, 08/17/2009 - 12:54 | 38842 Bob
Bob's picture

Perhaps the comaprison between racial and class "warfare" is not appropriate in this context.  I'm not going to bother arguing this one, but it is not difficult to oppose the gaming of the system that got us where they and we are today--distinctly different places--with us paying the bills for their sociopathic insanity. 

Sun, 08/16/2009 - 08:31 | 38126 I need more cowbell
I need more cowbell's picture

Look, we live in a world that has money and that money needs to be plundered by men with super-computers. Who's gonna do it? You, Cheeky? You, Andy? GS has a greater responsibility than you can possibly fathom. You weep for Lehman and Bear Stearns and curse Paulson, Ben, and TurboTax Timmie; you have that luxury. You have the luxury of not knowing what I know: that Lehman and BS's deaths, while tragic, probably saved Goldman Sucks @ss and that it's existence, while grotesque and incomprehensible to you, defrauds the US taxpayer of trillions- wait, wait, I mean saves lives, or some such shit. You don't want the truth because deep down in places you don't talk about at parties you want me HFT-ing the market, you need me on providing liquidity . We use words like CDS', toxic assets, cronyism. We use them as the backbone of a life trying to defend our money, that we stole from you. You use them as a punchline. I have neither the time nor the inclination to explain myself to a anonymous poster who rises and sleeps under the blanket of the very liquidity I provide and then questions the manner in which I provide it. I would rather you just said "thank you," , short IYR, get squeezed, and went on your way. Otherwise, I suggest that you pick up the phone, and just buy some GS stock- better then government cheese. Either way, I don't give a dam what you think you are entitled to.

Sun, 08/16/2009 - 08:35 | 38128 Cheeky Bastard
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hope that's sarcasm

Sun, 08/16/2009 - 11:48 | 38162 Cheeky Bastard
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lol ... Don't underestimate me Andy; i thought the above false-rant seemed familiar to me; but due to the fact that my insomnia is getting worse by the day, i could not put my finger to it; oh and BTW; one good goddamn movie; oh and did you find what you were looking for in those SC stocks

Sun, 08/16/2009 - 12:08 | 38170 Cheeky Bastard
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LOL, your " quest " reminds of Jason and the Argonauts. All i can say is; good luck friend.

oh, and i have an off-topic question for you. What is your take on the concept of PITCH; you know elevator pitch etc. I ask you this because i was just watching a vid of some VC douchebag, and find the whole concept of " pitching "  utterly retarded, and maybe one of the main reasons why VCs lose money like crazy.

Sun, 08/16/2009 - 12:35 | 38185 Cheeky Bastard
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so basically they are trying to hit a switch in a dark room, without even knowing if there is a switch in it, and is there even an electrical grid in the neighbourhood. and they are trying just because a blind dude pitched them the possibility that the switch MIGHT be there.

Sun, 08/16/2009 - 13:22 | 38227 Cheeky Bastard
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good call on MF. but the locations are to exotic to me. 

Sun, 08/16/2009 - 08:57 | 38130 Sqworl
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GS is government Cheese!!

Sun, 08/16/2009 - 10:10 | 38142 luckyky
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Nice rant. So true if your speaking to the sheeple.

But there are people trying to hold on to assets who understand that
"rising and sleeping under the blanket of liquidity" (provided by GS and the Gov.)is a bargain with the devil and believe that "blanket" must be removed at all costs. If not, eventually 95 out of 100 citizens will own nothing.

So "thank you" for nothing.

Sun, 08/16/2009 - 10:47 | 38147 I need more cowbell
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Geez, don't you people watch movies? How can anyone think I was promoting Goldman Sucks ( as if that name wouldn't be enough ).

Sheesh.

Sun, 08/16/2009 - 10:57 | 38148 Anonymous
Anonymous's picture

A Few Good Men

Well done. I liked it.

Sun, 08/16/2009 - 11:46 | 38160 MinnesotaNice
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I had to read it three times just to make sure it was sarcasm... it was good...

Sun, 08/16/2009 - 12:00 | 38168 Anonymous
Anonymous's picture

Don't get flustered, INMC. The little people -- they can't handle the truth.

Mon, 08/17/2009 - 11:53 | 38361 mossberg (not verified)
Sun, 08/16/2009 - 12:36 | 38189 chumbawamba
chumbawamba's picture

You've just provided a simple demonstration as to why this country is so fucked.  Critical thinking skills apparently became redundant in the 1980s.  Either that or the coke binge never ended.

I am Chumbawamba.

Sun, 08/16/2009 - 13:18 | 38220 Bam_Man
Bam_Man's picture

I believe you are plagiarizing Oliver Stone here. Specifically his screenplay for the movie "Wall Street".

Kudos of course to the original author. Nicely written stuff. His best effort since "Scarface" four years earlier.

Sun, 08/16/2009 - 16:49 | 38286 Hephasteus
Hephasteus's picture

It's always funny how the entitled like to project the entitlement sermon on everyone. The entitlement concept simply doesn't seem to want to universalize. it want's to remain in so few hands.

I guess it's just better to let things go to the extremes. Till they unleash as primal forces of nature. Uncoppable, unstoppable. Hard to ignore no matter how callous you try to make yourself. Don't play with sympathy. It doesn't work like you think it does.

 

Sun, 08/16/2009 - 16:57 | 38293 Anonymous
Anonymous's picture

I want the truth...

YOU CAN'T HANDLE THE TRUTH!

Nice movie adaption btw...

Sun, 08/16/2009 - 22:14 | 38421 Anonymous
Anonymous's picture

Snap.

Mon, 08/17/2009 - 06:44 | 38540 jester
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Few Good Men reference!

+13 trillion

Wed, 09/30/2009 - 08:08 | 83519 Anonymous
Anonymous's picture

:^) When the aliens from other planets pick up our signals and start monitoring our planet, they are going to think that the dominant, intelligent life form here is banks. :^)

Sat, 08/15/2009 - 19:40 | 37919 Anonymous
Anonymous's picture

Oil at $70.00 a barrel is also a factor for many consumers.

Sat, 08/15/2009 - 19:42 | 37921 NoBull1994
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Tyler - generally a good article.  I have to dispute the notion that the lowest 20% income bracket has an average net worth of >$100,000 though.  There is absolutely no way that is correct.  It is probably fairer to guess that the bottom 40% of Americans have zero or negative net worth.  This fact, however, doesn't prevent them from shopping at Best Buy or Abercrombie, apparently.

Sat, 08/15/2009 - 21:17 | 37963 . . .
. . .'s picture

McKinsey may be right about the average net worth in the bottom 20% and 40%.  But that's a totally irrelevant statistic, because you have some super-rich people that in any one year might be in a low income bracket due to big investment losses.

McKinsey should have done their charts showing median wealth in the bottom 20% and 40%.  For example, in 2004 and 2007, Fed statistics showed the bottom 40% by income as having a median net worth of about $50,000.  Also, the bottom 40% by wealth has a negligible median net worth of less than $20,000.  Check pages 13 and 25 of this Fed presentation:

http://www.national-economists.org/gov/mach09.pdf

 

People ought to be careful valuing companies that depend on the mass affluent for consumption.  Congress is likely to end up doubling taxes for everyone making over $100,000.  That'll really cut down the cash households with incomes of $100,000 to $250,000 have for luxury spending.  Obama might not want to raises taxes on the people from $100,000 to $250,000, but the government's debt and contingent obligations for medicaire and social security, plus whatever entitlements Obama and Congress add for medicare or whatever, are so big Congress and Obama will have no choice.  Conversely, it may mean transfer payments to people making less than $100,000 and/or protectionist rules helping their job prospects, which may help consumer companies catering to folks in lower income brackets.

Sun, 08/16/2009 - 07:40 | 38115 OrganicGeorge
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A few credit cards, a car loan, and a mortgage.

Throw in borrowed money for for a college education and voila you have subsantain debt for the bottom 20%.

Please remember everyone on this blog has investment money, most people live paycheck to paycheck.

 

 

Mon, 08/17/2009 - 12:51 | 38856 Bob
Bob's picture

Actually, don't see how anybody in the bottom quintile could have either positive net worth or a mortgage.  Few of their kids go to college, either.  You seem to be describing the 2nd quintile, although your reprimand is right on. 

Sun, 08/16/2009 - 08:03 | 38120 Ned Zeppelin
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Well said about "net worth" and the bottom half - the only net worth they had was from escalating home vlaues.  Take that out of the equation and the only thing left is relentless, non-deflating debt. I think the numbers regarding "average" net worth in "low" and "middle" are way overstated.  There are probably a couple of 98%ers who are screwing up the curve for the rest of the class. Take them out, and the number is ZERO or below - that, I am certain, is much closer to reality.

Sun, 08/16/2009 - 13:21 | 38225 Bam_Man
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There are a lot of low-income retirees in the bottom 20% who have considerable net worth.

Sat, 08/15/2009 - 19:43 | 37922 Anonymous
Anonymous's picture

I echo my boy CB's kudos on a very good review of the consumer. My only small addition to the discussion is to point out that WMT's comp store sales in the quarter negative for the US stores. The dollar stores are posting positive comps.

Yep, it is possible for the US consumer to trade down from WMT.

For those readers interested in some corroborating data, I would encourage them to look at the US Food Stamp program. Over 10% of the country is on Food Stamps. That ties to TD's observations here. The rules for this program are much more stringent than prior iterations. You basically have to be broke and cannot even own a car worth over $4500. Unless it is your home.

'Nuff Said.

Sat, 08/15/2009 - 20:05 | 37934 Sqworl
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http://www.youtube.com/watch?v=TswMeHnh2cA

Here is proof of the mentality of today's consumers!

Sat, 08/15/2009 - 21:30 | 37972 Big Al
Big Al's picture

Funny as hell  But I think it is supposed to be a joke.  Sort of like the skit Dave Chappell did (in whiteface) about what whould happen if blacks received reparations for slavery.

Sat, 08/15/2009 - 23:00 | 38018 Sqworl
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These are the people, with iPhones, Flat screen TV's in everyroom and SUV's and unemployed!!!

He made promises of change.  Banana Republic and the inmates are running amuck.  One gigantic Scam on the american people.  Allowing the Banksters to continue to pillage and rape our country.

Sat, 08/15/2009 - 19:43 | 37923 Hephasteus
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Now if they can just keep the shorts out of the bank stocks and continue to feed them fresh new common stock investors who subsequently get wiped out or diluted to nothing for 4 or 5 years without anyone figuring it out then this will be solved.

Sat, 08/15/2009 - 22:03 | 37987 Missing_Link
Missing_Link's picture

Naah, they'll let them into the small bank stocks, just not the big ones.  To help JPM, Citi, Goldman, BofA, Wells Fargo, etc. eat all the rest.

Sat, 08/15/2009 - 19:52 | 37924 lizzy36
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TD, excellent review of the U.S consumer.

Question: What percentage does the U.S consumer make up of world GDP?

Sat, 08/15/2009 - 19:59 | 37929 Pizza Delivery Man
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Everthing you need about your question.

http://www.wolframalpha.com/input/?i=WORLD+GDP+US+GDP

Sat, 08/15/2009 - 20:02 | 37930 Cheeky Bastard
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19.87% per 08 world gdp and percentage of consumer spending in the overall 08 us gdp

Sat, 08/15/2009 - 20:02 | 37932 lizzy36
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CB, thank you!

Sun, 08/16/2009 - 01:33 | 38085 lizzy36
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I don't buy the Chinese consumer consumption story.  It takes $5000 (usd) or more per capita income in China to have meaningful discretionary spending. About 110 million (i think this number is generous) Chinese or 8% of their total population fit this category. In the U.S it takes $26,000 or more to have discretionary buying power.  About 260 million Americans or 80% of the population fit (or used to fit) into this category. 

As for Jim Glassman, all i can say is the only way the major financial institutions business plans work is in a bull market. In the absence of a true bull, one is fabricated through the miracle of economic methodology designed to obfuscate reality. I call it the conspiracy of optimism.

Sun, 08/16/2009 - 02:09 | 38089 lizzy36
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Dude that had to leave MS after making unflattering remarks about Singapore (i think) in am email after an IMF meeting?

Btw, we are happy to have Rosie back up here after you yanks decided he was no longer worthy.

Sun, 08/16/2009 - 02:28 | 38094 lizzy36
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Emphatic about not being being included under the yankee banner?

I can respect (and understand) that.

 

Sun, 08/16/2009 - 11:50 | 38163 Cheeky Bastard
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non-Yanks of ZH, UNITE !!!!1 ( kidding )

Sun, 08/16/2009 - 02:17 | 38092 lizzy36
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I picked up the phrase "conspiracy of optimism" from the former strategy team @ Société Générale of James Montier and Edward Alberts.

Sun, 08/16/2009 - 07:57 | 38119 Ned Zeppelin
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And the Chinese consumer propping up the global economy does not do the US a bit of good, does it? I mean, what new US "living wage" manufacturing jobs are created so that China consumers can purchase our [fill in the blank, PLEASE]? If anything, given the 23% drop in July of Chinese exports (their numbers, so you know that's a low ball number), I think the evidence is clear that we are not holding up our end of the "deal", i.e., the symbiotic relationship whereby China has provided purchase money financing to the US consumer.  So, the lending gets downsized, and they have to figure out how to make sure their UST portfolio doesn't get hammered in the process.

Are the Chinese holdings of USTs enough to blow out the dollar? I was pondering the issue of "security" for the debt the Chinese hold. If you don't hold collateral for a debt, how else can you secure it? Well, in loan shark land, where there are no UCC filings either, your knee caps and the continued utility thereof function very effectively as collateral.  Think about the Chinese collateral - what is it, and how do you collect?

 

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