Bloomberg Sentiment Suggests Stagnant Economy To Stay

Tyler Durden's picture

Via Bloomberg Brief's Richard Yamarone,

According to the Chinese Zodiac, 2014 will be the “Year of the Horse.” And judging from some of the early comments in the quarterly earnings season, it looks like this year’s economic horse will pull up lame. The Bloomberg Orange Book Sentiment Index – a proxy for the overall state of economic affairs in the U.S. – has been running below 50 for 49 consecutive weeks, which implies a stagnant growth rate in GDP in the 2-to-2.5 percent range.

Expectations for real GDP this year are slightly higher than the 2.3 percent pace posted in 2013. Economists polled by Bloomberg anticipate a 2.8 percent increase while the Federal Reserve has a similar 2.8-to-3.2 percent forecast range. The Fed traditionally has lofty, and often incorrect, expectations for GDP.

The driving theme behind this subpar, sluggish recovery is the lack of desirable growth in real disposable personal incomes, which grew at just 0.6 percent during the 12 months ending in November.

This is also the reason behind weak activity in the retail sector this past holiday season. Howard Levine, CEO of Family Dollar Stores noted the company’s core lower income customers have faced high unemployment levels, higher payroll taxes, and recent reductions in government assistance programs. “All of these factors have resulted in incremental financial pressure and a reduction in overall spend in the market,” Levine said in a recent conference call. Consumers can’t spend what they don’t have.

In this year of the horse, household-related industries – retail, restaurants, entertainment, products – appear to have stumbled out of the starting gate. This is mainly due to a highly competitive and promotional environment.

Virtually every consumer-related company has made mention of the need to discount in this economy. Announcements from the retail sector imply profound weakness for retailers. JC Penney disclosed its intention to close 33 stores and eliminate 2,000 workers. Macy’s said it would shutter five department stores and furlough about 2,500 employees. Meanwhile, other retailers have reduced expectations. Best Buy’s domestic same store sales fell 0.9 percent compared to year-ago levels for the nine weeks ended Jan. 4.

The data support Orange Book anecdotal observations. Goldman Sachs-ICSC weekly retail sales index fell 1 percent during the week ending Jan. 11. This followed a 5.4 percent plunge during the previous week. Looking at the 13-week moving average of the year-over-year change, this high frequency barometer of retail activity appears to have returned to its downward trend and is rapidly approaching the 2 percent threshold associated with the onset of recession.

Housing data have also exhibited weakness. Housing starts fell 9.8 percent in December, while the level of forward-looking building permits slumped 3 percent. The MBA Purchase Index has also shown no sign of recovery and has trended lower in recent weeks.

As a result of all this domestic weakness in key interest rate sensitive sectors, the Federal Reserve may have to rethink its tapering initiative, particularly its mortgage purchases. My one “surprise” for this year is that the Yellen Fed may consider eliminating the interest paid on borrowed reserves to help open up the lending spigots and fuel economic growth.

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Shed Boy's picture

No manufacturing = no recovery. It's just that simple. If TPP passes, no recovery ever, period. Printing money does not a recovery make.

Crisismode's picture

What a surprise . . . .


The corporations have offshored and outsourced millions of jobs overseas,

The middle class has lost millions of employees earing living-wage salaries,

and replaced them with low-wage part-time jobs . . .

. . . and surprise, surprise . . . . retail sales are dropping like a rock.


Who coulda noed?


Colonel Klink's picture

Apparently only conspiratorial bloggers!

onewayticket2's picture


you're welcome to pay more each time you go to the store.  Corporations dont have a printing press - unlike the feds.  corporations have to make the equation work and that means lowering costs (that you demand, btw).  


perhaps you  might want to steer your distaste toward the government's policies to see how the market system is f'd with before laying all blame at the foot of those who are forced to play by bastardized rules.

booboo's picture

I see parades of people every day just going through the motion of living, no particular dreams, nothing to aspire to, nothing x nothing as Billy Preston once sung.

I see wood frame apartments spring out of the ground with low wage Mexican labor crawling around like fire ants and Termite obliteration companies setting up shop across the street, I quiped to my son today on the way to a "yob" that soon they will just say fuck it and start using crop dusting planes for termites over these soon to be shit holes infested with the (un) lucky ones able to get a housing chit from the government where the wives and children of career soldiers live while ma or pa will be slogging it out over resources in Botswana with a Goldman Sachs patch proudly displayed over their heart. 

Welcome to the jungle. 

Headbanger's picture

At least you're a helluva lot more optimistic than I am about the future!

Cause for one, I don't think there's going to be any "crop dusting planes for termites" or anything else when the powers that be abandon the "shit holes infested with the (un) lucky ones"  and there will be no "chit from the government" cause there won't be a government!

And we will all have to learn to start all over again by our boot straps just like our ancestors did when the Roman and every other empire fell apart.


Shed Boy's picture

Your WAY more optamistic then me. The future is black as far as I can see. You gave a hint to why in your post: "learn to start all over again by our boot straps just like our ancestors did". That concept would be something that Mom and Dad would have taught you. Parents haven't been keeping up on the whole "teach your children how to survive in the world" thing for at least 2 generations. Talked to any 20 somethings lately? to them, dieng and going to hell involves a dead battery on some electronic device or maybe no internet signal. Food magically appears before them, so does money. Skills? HA! They didn't build that because they haven't been told or figured out which end of the screwdriver works best.


This time when the empire falls, the rebuilding by our boot straps probably won't happen right away....if at all.

stant's picture

yep thats how i see it.

Dr. Engali's picture

Allow me to summarize:


Nobody has any fucking money!


That is all.

BuddyEffed's picture

And if instead they all had many fucking monies, there wouldn't be anything to buy with it.

Uber Vandal's picture

Actually, I expect Janet Yellen to soon state "that due to people hoarding money like they did during the Great Depression. I have no choice but to unveil negative nominal interest rates in order to further stimulate the economy."


PrecipiceWatching's picture

One only has to look at the dynamics of REAL employment numbers.


All the rest is cosmetic mulch over the Collectivist fomented rot and private sector destruction.

Rising Sun's picture

Stagnant - now is that before the crash or after the crash.



Spungo's picture

We need to give a few trillion more to the top 1% and hope some of it trickles down to the plebs

PrecipiceWatching's picture



You reflexive, "rich" bashers need to move your decimal point one or two places to the left, and then I might be on board.

Metalredneck's picture

I'm off to the barn to shovel horseshit tonight. 

How apropos.

PrecipiceWatching's picture

God's work.

Infinitely more productive and honest than routine Federal Reserve thievery, high level lawyering of assorted destructive intents, and any number of masturbatory financial gymnastics.

mvsjcl's picture

Is negative growth still considered growth?

DannoH's picture

Its not "negative growth", that has a bad connotation. Its "inverse growth", or "non-positive growth", or "positive anti-growth". Got to be PC for the FSA!

Spungo's picture

"You reflexive, "rich" bashers need to move your decimal point a couple of places to the left, and then I might be on board."

If you're in the 1% and you don't own stocks, you're an idiot. This is a fact. 

Yen Cross's picture

  Tyler you brought up an very important and valid correlation perspective, earlier this morning. The usd/jpy {vs} strong dollar/equity market correlation is beginning to break down. All the MOAR reason to expect the Fed. to cut QE next week.

  I won't say how I spotted the breakdown, as it took a lot of work.

  Good observation Tylers!

esum's picture

obumbler = stagnant economy


SDShack's picture

"The driving theme behind this subpar, sluggish recovery is the lack of desirable growth in real disposable personal incomes, which grew at just 0.6 percent during the 12 months ending in November."

Just wait until 0zer0care Sticker Shock becomes entrenched as 0zer0care Wallet Shock this spring/summer. Soon to be followed by 50 million employees losing their employer sponsored HC this fall. 2 to 2.5% GDP is a pipe dream.

madcows's picture

I dunno, maybe it has something to do with the fact that Kwiki marts can't sell 20 oz sodas anymore.

rsnoble's picture

No problem just doube the minimum wage.  I'm sure that's already seen as a possible solution.  Or at least a lie to say that it's a solution till the next trick is pulled out of the bottomless hat.