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The Spending Crunch Is Official: "We Are Confident There Is An Issue With The Consumer"
Think the Walmart "disastrous" sales memo was a one-off event, which net of Walmart's damage should be completely ignored (something the market has been perfectly happy to oblige with)? Then listen to a separate perspective on the US consumer, this time from a very different angle: that of Town Sports International which operates such gyms as New York Sports Club, and specifically its CEO David Gallagher, who in last night's conference call just confirmed what everyone knows: "As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January."
It goes on:
Based on how broad-based the slowdown has been quarter-to-date, we are confident there is an issue with the consumer. We were going to do everything in our power to make up for this January member shortfall, we continue to see softness and expect to net less than half the net member gain that was achieved in Q1 of 2012. Unfortunately, we are also seeing the softness in our ancillary revenue.
And on:
While the consumer has recently turned much more cautious again, we were hoping that it will be temporary, and we are confident that the foundation and ability to execute at a very high level that we now have in place will serve us well. We have worked very hard to rebound from the recession and rebuild our membership base from the low we experienced in 2009.
And on:
So we’re seeing the behavior very similar and we’re very confident that it is coming from the consumer. As I mentioned earlier in my script part portion, when we look at our business there are really 3 components that we’re watching closely all the time. The first is execution and how we delivering our product and services. Second is, what the competition looks like how it has changed mark-to-market, year-on-year and then in terms of consumer behavior. We’ve seen consumer sentiment change drastically within the last couple of months. We saw that after the first really payroll period in January, which is about the second week of January, we really start seeing a slowdown in Ancillary, Personal Training and membership sales. And our sort of increase that we’ve seen on the cancellation side is directly related to the members that are non-users. So it really does go to the consumer side of the business.
And on:
We believe that once consumers understand our average member is probably losing somewhere in the area of about $1,500 a year once our members understand the impact they have on their daily living with the rising cost of gas and the lower income from social security or the taxes that they’re seeing now.
But there may be hope:
We estimate close to half of this loss is membership attributable to Hurricane Sandy.
Luckily, in a centrally-planned, command economy, who needs such meaningless fundamental staples as cash flow, consumption or even trade...
Source: CLUB earnings call transcript
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Really? You are surprised by this? Given the increased concentration of wealth at the top that has occurred over the past 30 years, I would be surprised if it were not so.
http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-...
Prepare for the deflation scare. Animal spirits run high when variation and deficits go to the sky all followed by money supply.
The ES is down 6 pts today...must be a snow storm coming.....
Yep! BIG one - 300 - 500 mile front moving right up the middle of the country with freezing rain, sleet, and up to 12 to 15 inches of wind-driven snow right up the Kansas/Nebraska/Missouri/Iowa corridor.
There's an issue with the consumer? No shit, Sherlock. Nobody has any money. Or, I should say nobody is making enough money to keep up with inflation. Except government employees.
The Plutocrats can't shit on consumers for 30 years then blame them for the slowdown in consumer spending, but they'll do it anyway. The money that should be circulating around this economy is sitting in off-shore banks accounts.
Due to the impending currency crash, I'm laying in a supply of unspoilable "Emergency" food - and with the same transaction, I'm stacking! All you gotta do to do both at the same time is buy McDogfood Burgers and pile them in a closet. They'll never spoil or rot, and neither mice or bugs will touch them so you don't need special storage conditions! And the real benefit is that after 5 years you can pick one of them up and eat it without special preparation and it will taste EXACTLY like you just took it from the kid at the McD window!
And this stuff is better than gold 'cause you can not only eat it, but trade it for other stuff with other preppers!
The Perfect Hedge!!!!!
Its the weather stupid. When you have no money you find a way to pay for heat and food. Even having plumbing and cable comes after those.
Wonder why Biderman says everything is getting better. *200,000 jobs, salaries and wage increases doubling. Corporate cash straight to the consumer (human beings.)
I guess the only thing people are buying, are the dips.
That, and it's roll-up-the-rim time at Tim Hortons.
There goes all my discretionary spending after stacking.
Spent some on gold and silver this morning; does that count?
Noboby wants to hear this fact, but it is a fact and thus can not be denied.
The payroll tax that folks pay into the social security fund was reduced temporarily as part of the stimulus program passed after the financial crisis of 2008 and the collapse of the vast housing bubble. At the time, this temporary reduction was designed to get extra cash into the pockets of consumers to stimulate spending. To a degree this worked, as average wage earners had more cash. Nobody anywhere at anytime called this a tax cut or was it a tax cut, it was a stimulus measure and nobody said it was anything but a temperary cash infusion. The Social Security system made due with less revenue as a result. The stimulus reduction is over, people now pay what they were paying before the stimulus package went through.
If this is another case of "nobody could see this coming", then everybody is either willfully stupid or there was a vast campaign to lie to people about what payroll tax reduction was all about.
Or are people's memories so fucked up that they can't fathom the concept of temporary?
Are people still allowed to collect unemployment benfits to infinity?
Read my post from November of 2012
Big Data/Analytics If Used Out of Context and Without True Values Stand To Be A Huge Discriminatory Practice Against Consumers–More Honest Data Scientists Needed to Formulate Accuracy/Value To Keep Algo Duping For Profit Out of the GameIn that link above I explain how a lot of this is done, dirty code and math and stupid queries trying to match data that doesn't relate, but they do it. We have all the lip service but nobody changing any algortihms or models.
This a great post with examples of "denial" galore. Yesterday your tweet is worth repeating...relative to the NJ casino bankruptcy...
Industry after industry finding out what tapped out consumers with no access to $1.8 Trillion in excess reserves means
Nobody has bothered to explain what taxes have increased. Didn't Congress vote to keep the Bush tax cuts in place for most people? Only the Social Security payroll tax went back into effect. I doubt this one tax suddenly affected everyone's spending.
You are overlooking price inflation, from food to gas to electricity, that has left most of us broke. I might add that my school and property taxes went up 20% at the same time. In any case, I think retail was dying before February. As for Walmart, I've noticed they do not immediately restock their shelves (and their prices are no great shakes either).
The FICA tax increase most certainly has taken decent bite out of the average persons paycheck. That is 2 percent right off the top each and every paycheck until you hit the max contribution depending upon your yearly salary. Add to that another factor of running up the credit cards over the holidays. I'm sure that is also having an effect on discretionary spending and add in inflation on food and energy. I think most people not working a state or government job are pretty much tapped out as far as excess spending cash. Retail is always slow in January but I think what Walmart is complaining about is the drop in sales on essential items that people buy every month outside the standard lull.
My next door neighbor is middle class and he said he took a $13k net annual hit.
My next door neighbor is middle class and he said he took a $13k net annual hit.
What if the consumer made a New Year's resolution not to feed the beast and is doing everything possible to stick to it. ?
Ben and Barry has spent it all to keep these markets up. Most everything is in decline or the growth rate is in decline.
Markets will likely collapse very soon.
The trouble is the combination of the following:
1) gas prices high continuously
2) grocercies going up DAILY
3) expiration of Payroll Tax break
4) all products crap requiring regular replacement
5) rents going up
How do the elites expect the underclass to CONSUME when the CONSUMER is tapped out?
there isn't a slow down, it is a shift, people are buying guns, ammo and gun accesories, so retailers like Walmart, and the gym places mentioned are suffereing. Lets look at walmarts firearm/ammo sales and we would see a big upward trend right to the point when they pretty much ran out of supply
What a great reality show this would make - 'Syria comes to America'
The fucking retarded Americans would love it - till some joker unloaded a M50 into one of their picture windows wiping out half their family.
Now THAT'S REALITY!
OMG! This is incredibly bullish news for nominal stock prices...no doubt the S&P will only suffer a minor bump before rocketing hundreds of points higher.
I have two business's that require disposable incomes to bear the cost, I saw in both a dramatic decline after the third week in January. Just waiting to see what happens next........
http://www.youtube.com/watch?v=65MYjJA3Qzk
A few minutes of Charlie McGrath reviewing similar retail statistics across America seen in so many other large retail chains, shutting down thousands of stores ...
The American and global financial system is fundamentally flawed, in an unfixable way, since it depended on the runaway triumph of fraud, backed by force, which has nothing built in to restrain that from automatically getting worse, faster.
The realities are that money was always backed by murder, and always will be. When the money system becomes too triumphantly fraudulent, then it drives its own madness, through its excesses.
Here is another example of all the correct cliches regarding the actual money/murder systems, throughout most of this video, followed by the tail end of typical impossible ideals returning to negate what all the previous passages of that video demonstrating was the actual history:
http://www.youtube.com/watch?v=5hfEBupAeo4
All Wars Are Bankers' Wars
That video is about three quarters of an hour long.
Nothing new ... merely reviews the hidden history of money systems controlling the murder systems, since the money system was the one that benefits.
After more than a Century of the exponentially growing triumph of the best organized global gang of criminals, the international banksters, taking back control of the USA, the situation Americans are in now is already terminally deranged.
By and large, the only "solutions" that I ever encounter are either the mainstream morons advocating even more of the same, or reactionary revolutionaries, advocating their versions of even more of the same old-fashioned religions or ideologies.
I believe that we will go through the runaway triumph of too much fraudulence, continuing to be backed up with more force, for as far as that can possibly go ...
The evolution of better dynamic equilibria between the various organized crime gangs that are "controlling" the world is not apparent on the current horizon of history, but rather, still out of sight, around the curvature of the exponential growth, beyond where we can currently see.
The sublimely paradoxical nature of the problem of negotiating better death controls inside a system of runaway triumphant deceits, backed by technological powers many, many orders of magnitude bigger than anything previously known in human history, appears to barely be appreciated by anyone. I have never seen any popular mainstream, nor alternative, figurehead address that paradox forthrightly.
Literally hundreds of Zero Hedge articles, like this one, keep throwing one more pebble onto the mountain of evidence that the American and global systems are fundamentally the runaway triumph of frauds, which cannot be fixed by anything within their frame of reference, nor fixed by anything within the frame of reference of any old-fashioned religions nor ideologies.
My view is that we should stop using false fundamental dichotomies to understand these problems, and especially stop using the related impossible ideals to base the notions of "solutions" upon.
Governments were the best organized criminals, who were controlled by the best organized covert criminal gangs. There are no genuine solutions outside of those deeper dilemmas!
The only genuine solutions would be more regular death control systems, to maintain more regular debt control systems. The current runaway debt insanities must drive runaway death insanities.
The only genuine solutions to the current problems of triumphant organized crime taking over governments would be better organized crime taking over governments.
Americans now have a front row seat to watch the rise and fall of the global systems of force backed frauds that they became the "leaders" of ...
Theoretically, they should accept that, and work towards becoming "leaders" of the new systems, which must be the same basic purposes, achieved through radically different changes in the paradigms regarding the understanding and the means to do that.
However, I have yet to see any videos or articles that continue being consistent with their analysis when they turn to their "solutions." For now, we can only watch as the established systems continue to double down on their force backed frauds, while the currently popular, controlled opposition proposes various political miracles, based on impossible ideals, as the ways to fix those runaway social insanities ...
RM -- Thank you for the links, and for your ever lucid posts. I follow them earnestly, seek them out. Please don't stop.
Re. The eviction of the Liars and Destroyers -- I do envision their -- Its -- defeat, but cannot see it occurring by human hands. Nevertheless, we can do what we can. It makes for a worthy death.
You are quite welcome Ludwig!
Thanks for the encouragement.
I agree with your hopes,
and similar consolations.
You want a better system? Might I suggest some sort of adaption of the Amish way of life.....
We interrupt this important conversation to bring you a breaking news story!!!!
When discussing Israel we need to look at the root cause of the conflict - have a look at this video The Israeli General's Son – the video Israeli does NOT want you to see was made by the son of the general who lead the 73 Israeli offensive - and later turned against Israel's foreign policy
A real eye-opener, pass this around http://www.youtube.com/watch?feature=player_embedded&v=TOaxAckFCuQ
I wonder if Mossad is zeroing in on my IP and sending black choppers for posting this?
Anecdotal reports like this are not of much use.
Because all data are lies the only thing that will tell me that the consumer is dying will be retail layoffs AND bankruptcies.
We have been seeing this in the UK with some major high street retailers biting the dust in January.
When this starts to happen in the US the snowball will start to gain momentum and there will be NO STOPPING IT