Personal Consumption

Tyler Durden's picture

Everything Changed In 1980 - Why The Fed Is Wrong





Unfortunately, for Mr. Rosengren, since the average American was never allowed to actually deleverage following the financial crisis, and still living well beyond their means, economic growth will remain mired at lower levels as savings continue to be diverted from productive investment into debt service.  The issue, of course, is not just a central theme to the U.S. but to the global economy as well.  After seven years of excessive monetary interventions, global debt levels have yet to be resolved. If the Fed does proceed in hiking rates in the current environment, it will likely be a “policy error” which will be regretted in the not too distant future as debt service costs rise thereby further reducing consumers ability to “consume.”

 
Tyler Durden's picture

Key Events In The Coming Week





Following last week's lull in global macro, it’s a busy start to the week in which we get the latest deluge of global flash PMIs, while the US economic calendar is loaded with New Home Sales data, Trade Balance, Initial Claims, UMichigan sentiment and the revised US Q1 GDP print on Friday. But perhaps the most expected event will be Yellen's speech on Friday at Harvard's Radcliffe, where the Fed chairman is expected to reveal some more hints on the upcoming rate hike.

 
Tyler Durden's picture

Another Headline Head Fake - The Consumer Can't Save The U.S. Economy





At the end of the day, the seasonally maladjusted data for April retail sales amounts to no more than a swiggle in the larger trend. To wit, consumption spending financed by the growth of transfer payments and household borrowing is coming up hard against Peak Debt, while tepid growth in wage and salary income remains hostage to a domestic economy plagued with structural barriers to growth, an aging business cycle and a gathering global recession from which it is not remotely decoupled. So contrary to Reuters and its Keynesian quote standbys, it is not true that “the demise of the U.S. consumer have been greatly exaggerated”. Actually, it can be hardly exaggerated enough.

 
Tyler Durden's picture

Even Bill Gross Misunderstands "Free-Market Capitalism"





We have deviated so far from free markets at this point that even the top financial minds no longer have any understanding of what is meant by capitalism. It must be true, for anyone who understands capitalism could never have published such a letter. The logic in Mr. Gross’s argument is beyond invalid, in fact, it is so ludicrous it borders on insane. We mean this quite literally...

 
Tyler Durden's picture

Stop Blaming Consumers, They Can't Help It!





Don’t blame those poor consumer’s for not spending – they are spending everything they have and then some.

 
Tyler Durden's picture

Warning Signs





Rising wages and employment costs (benefits, healthcare, etc.) are a direct input into the profitability equation. Therefore, as the economy slows and other cost-cutting measures, accounting gimmicks and share buybacks lose their ability to increase bottom line profitability, it is only a function of time before the focus returns to the cost of labor. With corporate profitability currently under pressure, overall economic activity weak and global conditions deteriorating, just how long can companies sustain employment and wage growth? The answer is not long.

 
Tyler Durden's picture

"Debt Is The Cause, Not The Cure"- Why $19 Trillion In Debt 'Is' A Problem





Debt, if used for productive investments, can be a solution to stimulating economic growth in the short-term. However, in the U.S., debt has been squandered on increases in social welfare programs and debt service which has an effective negative return on investment. Therefore, the larger the balance of debt becomes, the more economically destructive it is by diverting an ever growing amount of dollars away from productive investments to service payments. The relevance of debt growth versus economic growth is all too evident as shown below...

 
Tyler Durden's picture

What Americans Spent The Most Money On In Q1





what did they spend the most amount of money on? The answer, drumroll.... Recreational goods and vehicles. Not cars, which actually were a huge negative to Q1 GDP growth, reducing the headline consumption number by $13.4 billion nominal, but recreational vehicles, and other sundry related goods, which amounted to to $11.3 billion in Q1 spending.

 
Tyler Durden's picture

US Economy Grew At Just 0.5% In Q1, Missing Expectations, Lowest Growth Rate In Two Years





"Did the Fed have an advance glimpse at Q1 GDP?" That was a question everyone was asking yesterday when the Fed came out with another not too hawkish statement. The answer may have been yes because moments ago the BEA reported that the US economy grew at just a 0.5% annualized rate in the first quarter, missing expectations of a 0.7% growth rate, growing at half the rate recorded in the 4th quarter, and the lowest quarterly growth rate since Q1 2014 (when the winter was blamed for a negative print). It was also the third consecutive quarter of GDP declines.

 
Tyler Durden's picture

UMich Is Worried About "Consumer Resilience" As Sentiment Tumbles To September Lows





We were wrong: several minutes ago when we documented the collapse in the Gallup Economic confidence, we said that "we look forward to the UMich confidence report to beat expectations when it is released in just a few minutes." Moments ago the official print came out and it was not pretty: sliding from 91 to 89.7, not only did the print miss expectations of a rebound to 92.0, but was the lowest print since September 2015. The reason for the drop? Consumers reported a slowdown in expected wage gains, weakening inflation-adjusted income expectations, and growing concerns that slowing economic growth would reduce the pace of job creation.

 
Tyler Durden's picture

Is Trump's "Recession Warning" Really All Wrong?





There is currently no evidence of a recession now, or even in the few months ahead. There never is. While Trump’s call of a “massive recession” may seem far-fetched based on today’s economic data points, no one was calling for a recession in early 2000 or 2007 either. By the time the data is adjusted, and the eventual recession is revealed, it won’t matter as the damage will have already been done.

 
Tyler Durden's picture

The Next Big Problem: "Stagflation Is Starting To Show Across The Economy"





"I think stagflation is starting to show - that idea of stronger nominal growth but weaker real growth is starting to show up across the economy. It certainly is showing up with real personal consumption slowing; it's showing with slower job creation growth as the wage rate rises, and it's showing up in weaker profits as the share of labor income rises reducing profit margins for corporations."

 
Tyler Durden's picture

One Third Of Q1 Economic Growth Was Just "Revised" Away





While the February personal consumption expenditures (aka personal spending) - that all important data about the well-being of the US consumer - was in line with expectations rising 0.1%, it was the January revision that was striking. From a 0.5% increase reported a month ago, it was now revised to a paltry 0.1%. In nominal dollar terms, this means that instead of US consumer spending a whopping $67.5 billion more in January, the increase was a paltry $14.7 billion, a delta of $52.8 billion!

 
Tyler Durden's picture

Healthcare Is About To Surpass Housing As The Biggest Source Of American "Growth"





What was most troubling in yesterday's GDP report is that the second highest spending category making up the GDP calculation, Healthcare at $1.9 trillion, has been soaring in recent years, more than offsetting the housing weakness, and as the chart below shows, the US economy is within 2-3 quarters of the moment when outlays on healthcare (and Obamacare) will surpass spending on Housing.

 
Tyler Durden's picture

U.S. GDP Rose 1.4% In Final Estimate Of Q4 Growth As Corporate Profits Plunged





While the final revision to Q4 2015 GDP was so irrelevant it was released on a holiday when every US-based market is closed, even the futures, it is nonetheless notable that according to the BEA in the final quarter of 2015 US GDP grew 1.4%, up from the 1.0% previously reported, and higher than the 1.0% consensus estimate matching the highest Q4 GDP forecast. The final Q4 GDP print was still well below the 2.0% annualized GDP growth reported in Q3.

 
Syndicate content
Do NOT follow this link or you will be banned from the site!