Spending On Gambling And Low-End Hookers Slides; Weak Booze Sales Blamed On Weather

Tyler Durden's picture

In yet another indication that the US consumer is tapped out and rolling over, a report from the "Vice Index" reporting firm SouthBay Research which tracks spending on gambling, liquor sales and prostitution, says that "spending on vices wasn’t very strong in December, a sign that overall consumer spending was weak, according to the latest reading of the Vice Index from SouthBay Research’s Andrew Zatlin" as the WSJ reports. "The Vice Index for December points to stable but subdued consumer spending," according to SouthBay's head Andrew Zatlin further predicting that retail sales slipped 0.1% in December from November.

For those unfamiliar, "The vice index is a proprietary creation of Mr. Zatlin’s, who has developed his own – very accurate – methods of measuring the economy, and who we’ve written about a few times. He culls spending data on gambling, liquor sales and prostitution (he doesn’t disclose exactly how he tracks these) and plugs them into a program that he says allows him to predict overall retail spending with a lead time of several months. The vice index fell to 101 in December from 105 in November, a range it’s been in all fall and most of the year. What the index is really illustrating, though, is the split in the economy between the haves and have nots, Mr. Zatlin told MoneyBeat. That may not sound like an usual state of affairs, but it’s the lack of spending among lower income levels that’s keeping the economy from taking off, he said."

And while the split between "the 1%" and "everyone else" was evident in the faster decline in beer sales compared to wine sales, as well as gambling where the low-end contracted while the high end expanded, nothing says a recovery for the 1% like the following sentence: "High-end escorts successfully raised prices,” Zatlin wrote in the report. “Lower-end escorts did not.

Ironically, some still refuse to admit that the US economy is now running on a fast (1%) and slow (everyone else) track: the same people who blamed the plunge in alcohol sales on, you guessed it, the cold weather. From the FT:

New figures from GuestMetrics show that advertising initiatives from beer and spirits companies have struggled to lure drinkers to imbibe more alcohol at bars, clubs and restaurants in the US. Beer sales fell 4 per cent from 2012 to 2013, spirits sales were down 2.5 per cent and wine sales slipped 1 per cent.

 

Bill Pecoriello, of GuestMetrics, attributed the declines to weak traffic at bars, clubs and casual dining restaurants. Bad weather and a shorter holiday shopping cycle was responsible for the declines accelerating towards the end of the year, he said.

 

Moreover, in spite of signs that the economy is picking up, unemployment remains elevated. Mr Pecoriello said traffic declines at clubs and bars was "likely symptomatic of young adult consumers in the United States remaining under significant economic pressure".

Because nobody frequents bars when it's cold outside, like during the winter...

Finally, for those who aren't still stuck in denial, here is once again, Zatlin's accurate assessment of the farce that the US economy has become: "If you don’t [have money] you’re pulling back and pulling back even faster, ” Mr. Zatlin said. He noted that gambling revenue (remember, we’re talking about vices here) continues to contract, especially in places like Detroit and Atlantic City, which cater to more working class patrons. "People who are at the lower end are screaming now."