Despite near-record high equity prices, it appears soaring gas prices, stagnant incomes, and unaffordable homes are weighing on the American consumer far more than talking-heads would have investors believe. Gallup's latest economic confidence index re-tumbled to -9, 2015 lows and the lowest since Nov 2014. What is worse is the spread between current conditions and the outlook is gapping with hope for the future at its lowest since the end of QE3 after peaking In Feb.
It’s not difficult to see that the foundation is crumbling...
How can you measure happiness? The mental or emotional state, the smiley well-being feeling that is so individual and yet we measure happiness, we study it, we analyze it, we even celebrate it on March 20th every year, but what is it?
On a year-over-year basis, average spending in May of 2015 was $7 less than 2014, and nearly identical to 2013, when the US unemployment rate was nearly 3% higher, and the economy was supposedly sputtering badly enough for the Fed to launch QE3. Finally, as the chart below shows, this was the biggest month of May consumer spending drop in nominal dollar terms since the 2008 financial crisis.
America The Obese: Is There A Multibillion Dollar Conspiracy To Make Sure Americans Stay Overweight?Submitted by Tyler Durden on 05/29/2015 17:55 -0500
According to Gallup, America is now fatter than it has ever been before. But how can this possibly be? After all, Americans spend an astounding 60 billion dollars a year on weight loss programs and products. After putting so much time, effort and energy into losing weight, shouldn’t we be some of the healthiest people on the entire planet?
Following the collapse in Gallup's consumer confidence and Bloomberg's Consumer Comfort, UMich Consumer Senitment printed 90.7 (against expectations of a rise to 89.5 from 95.9). With May's preliminary print the biggest miss in 17 months, this final drop leaves Consumer Sentiment at its lowest since November 2014. Hope dropped from 88.8 to 84.2 but it was the collapse in Current conditions - which fell from 107 to 100.8 - that crushed the headline. This is the biggest plunge in current conditions since Summer 2011 (the US debt downgrade). Business expectations plunged to 8-month lows, employment expectations tumbled... but the number who think it's a good time to buy a house rose.
With business confidence collapsing, Bloomberg's Consumer Comfort index - after dropping to its lowest since December - plunged once again this week to 40.9 (from 42.4). This is the lowest since Novemeber and extends the losing streak to 7 weeks - something we have not seen sionce May 2008. This confirms Gallup's weekly tracking of consumer confidence dropped back to its lowest levels since early December 2014 with 53% of Americans now saying the economy is getting worse. Despite all the exuberance over lower oil prices, Consumer Comfort in The South is crashing. Perhaps even worse - for a consumer-driven economy - is that the "buying-climate"suffered its biggest drop since Dec 2011.
It’s amazing when you think about it– a combat veteran who lost a leg supposedly fighting for ‘freedom’ can’t have the medical procedure he needs because a destructive government bureaucracy. That’s what freedom means today in America. And nobody’s fighting for it. Soldiers are off risking life and limb for oil companies, banks, and defense contractors. And citizens are distracted with bread and circuses. All the while, government power continues to expand at the expense of the individual.
Psychology is very often how societies avoid looking in the mirror. A major structural reason for the surging interest in happiness is somewhat more disturbing, and concerns technology. Until relatively recently, most scientific attempts to manipulate how someone else was feeling occurred within formally identifiable institutions, such as psychology laboratories, hospitals, workplaces, focus groups, or some such. This is no longer the case. In July 2014, Facebook published an academic paper containing details of how it had successfully altered hundreds of thousands of its users’ moods, by manipulating their news feeds. There was an outcry that this had been done in a clandestine fashion. But as the dust settled, the anger turned to anxiety: would Facebook bother to publish such a paper in future, or just get on with the experiment anyway and keep the results to themselves?
In short, the very project of counting “jobs” is essentially laughable in the context of the US economy as it is currently structured - for better or worse. But regardless of the equities and efficiencies of the current labor market, one thing is abundantly clear. The Payroll Friday report amounts to virtually meaningless noise. It is bad enough that the bubble vision Romper Room and the casino robo-traders are oblivious to this reality. What is scary is that the Eccles Building is just as clueless.
What is extremely clear is that there is something amiss with the statistical headline employment and economic data. While there are indeed pockets of improvement, which should be expected following a recessionary contraction, there is a lack of widespread recovery. That sentiment is clearly reflected in every major poll of American's over the last year. What is important is that there is a clear disconnect between the financial markets, statistical economic headlines, and the reality of the vast majority of American consumers. So, riddle me this - what happens when that disconnect is eventually resolved?
The market is currently engaged in the longest bull run in history without a 10% correction. The decline in momentum, the weakness in economic underpinnings and lack of Central Bank interventions (not to mention the threat of an increase in overnight lending rates) certainly provide the necessary ingredients for a sharper than expected correction this summer.
There is a practical benefit to shifting our attention away from the stock market. Any market that can yo-yo 10% within a day for no apparent reason, or undergo multiple booms and busts in a 20 year period should not be given too much credibility. The wealth-effect on the way up always turns into the wealth-destruction effect on the way down.
Despite record-er stock prices, weather excuses for current economic weakness, and The Fed promising that growth is here and everything will be awesome, it appears the message has not reached the US Consumer. Gallup's U.S. Economic Confidence Index plunged 9 points last week (the largest week-to-week drop since last July) to its lowest weekly score since December. The main driver was a collapse of hope as 'outlook' fell to November lows.
Not long ago we noted that contrary to the old adage, money can indeed buy happiness. Given this, it stands to reason that the converse is likely true as well. That is, no money probably contributes to unhappiness. Sure enough...