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US Consumer Is Battered But Not Beaten

Cornelius's picture





 

First, the bad news. Only 14%, an abysmally low number, believe that job prospects will improve over the rest of the year. Nearly 60% believe high unemployment to continue over the next several years, hardly a demand-inducing statistic. Despite the massive stimulus packages, confidence in government policy retreated with a third straight monthly decline (32% holding unfavorable views), though it is significantly better than the 50% a year ago. Consumers also shied away from big ticket items as homes, vehicles and major household durables declined in July. Additionally, anticipated price discounts continue to remain at their all-time peaks; a consumer-led deflationary indicator, despite the US ZIRP.

The good news is a significant improvement in sentiment on a YoY basis (63.2 vs. 53.5). Of course, July 2008 was still pretty squarely in the volatility backwash and consumers seem to be buying the V-shaped bounce (or at least something closer to the square root sign). Total PCE also is expected to increase 1.5% in 2010 - off an admittedly low basis but a promising indication after we consider the sharp (permanent?) increase in the US household savings rate. 

Consumer confidence is clearly still very fragile. If we do see a secondary market crash, the resulting hit to the consumer psyche may kill much of the momentum that has been slowly building up. The other aspect of the story is that the currently unsustainable level of government spending is artificially inflating expectations, regardless of consumer approval of government policy. Even without a market crash, we may see confidence erode simply as federal programs scale back down to "normal" levels.

 


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Fri, 08/14/2009 - 11:34 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:58 | Link to Comment Ghettomedic
Ghettomedic's picture

A glitch in the apparatus has manifested.

Fri, 08/14/2009 - 12:44 | Link to Comment mdtrader
mdtrader's picture

And it happened on a tripple digit down day. Oh the irony. ;-)

More bullish commentary please. I need to get my 950 puts back in the money. lol.

Fri, 08/14/2009 - 13:37 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:34 | Link to Comment Dixie Normous
Dixie Normous's picture

Maybe the consumer has finally realized that spending their money on stuff made elsewhere (see China) doesn't really help anyone here aside from the importer.

I would also argue that people who lost decent jobs at decent wages realize that if and when they do go back to work it will be in a lesser job for less money.

Fri, 08/14/2009 - 12:42 | Link to Comment Anonymous
Fri, 08/14/2009 - 13:52 | Link to Comment Cornelius
Cornelius's picture

Yeah, that whole free trade thing is a crock of shit.

Fri, 08/14/2009 - 11:35 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

Won't be your daddys' normal.

Fri, 08/14/2009 - 11:37 | Link to Comment Anonymous
Fri, 08/14/2009 - 12:17 | Link to Comment Anonymous
Fri, 08/14/2009 - 12:53 | Link to Comment Ducky
Ducky's picture

by mid 2010 expect green shoot forward looking earnings for 2011 to trade @ 16.

i'm with you

Fri, 08/14/2009 - 11:39 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:45 | Link to Comment Veteran
Veteran's picture

...and toilet paper.  Shit tickets are going to be teh hawtness

 

http://www.nakedcapitalism.com/2009/08/guest-post-debtors-revolt.html

Fri, 08/14/2009 - 11:50 | Link to Comment Ghettomedic
Ghettomedic's picture

As an investment guns and gold aren't that great.

Fri, 08/14/2009 - 12:13 | Link to Comment Anonymous
Fri, 08/14/2009 - 20:52 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:40 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:41 | Link to Comment mightybillfuji
mightybillfuji's picture

wait until you see how the consumer feels net of the 3 billion cash for clunkers and the phase out in about 4 weeks of the 8,000 tax credit for home buyers

and very soon the tax bills are going to start coming in for all this magical spending....

Fri, 08/14/2009 - 11:47 | Link to Comment JohnKing
JohnKing's picture

The ministry of propaganda needs to get busier, the consumer needs more green shoot commentary.

 

Is Baghdad Bob available?

Fri, 08/14/2009 - 15:23 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:47 | Link to Comment OBRon
OBRon's picture

Momentum?  What momentum?

Listening to cnbc, you would think the rush to the equity mkts has been like a flood of Biblical proportions.

They're just now finding out it was more like someone left the hose on in the driveway.

And now that Timmy & Ben are finished washing the car, it's still a clunker.

 

Fri, 08/14/2009 - 11:52 | Link to Comment Daedal
Daedal's picture

On a long term basis, 'confidence' is about as useful as a stress ball. Everyone was 'confident' that home prices would appreciate.

Fri, 08/14/2009 - 12:16 | Link to Comment slowtwitch
slowtwitch's picture

exactly. consumers are a bunch of sheep.. who cares what they think.

Fri, 08/14/2009 - 11:54 | Link to Comment Anonymous
Fri, 08/14/2009 - 15:36 | Link to Comment Anonymous
Fri, 08/14/2009 - 11:55 | Link to Comment ED
ED's picture

oops...I thought it said battered but not eaten. Dang, there goes my impulsive, hair-trigger consumer psycology again

Fri, 08/14/2009 - 11:59 | Link to Comment Anonymous
Fri, 08/14/2009 - 12:12 | Link to Comment Anonymous
Fri, 08/14/2009 - 12:19 | Link to Comment Arthor Bearing
Arthor Bearing's picture

Only ponzi schemes depend on confidence, it should be irrelevant

Fri, 08/14/2009 - 12:21 | Link to Comment Anonymous
Fri, 08/14/2009 - 12:30 | Link to Comment Dr Hackenbush
Dr Hackenbush's picture

"it's the unemployed people that are ruining this recovery for all of us."  -CNBC 

Fri, 08/14/2009 - 13:32 | Link to Comment Anonymous
Fri, 08/14/2009 - 14:24 | Link to Comment bernbear (not verified)
Fri, 08/14/2009 - 12:54 | Link to Comment Anonymous
Fri, 08/14/2009 - 13:34 | Link to Comment Milton
Milton's picture

$80 hoodies at Abercrombie are not happening.

Fri, 08/14/2009 - 15:31 | Link to Comment Anonymous
Sat, 08/15/2009 - 12:56 | Link to Comment Anonymous
Sat, 08/15/2009 - 12:57 | Link to Comment Anonymous
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