America's Consumers Are Dropping, Not Shopping

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

McDonald's latest results confirm that something is very much amiss on the consumer side. Total global revenue grew only 1% Y/Y, including new store launches and acquisitions.

However, as has been the pattern since 2012, US comparable store sales lagged markedly. The rate of contraction in Q1 was actually the worst in more than a decade.

 

ABOOK Apr McD Same Store US

Even if you believe that the cold and snow of January and February played a role, it could not have explained that comparison. There is simply no way that anything other than consumer exhaustion can create the chart above.

One need only glance at the revenue history of companies in the S&P 500 to see that in full effect. If McDonald's persistent travails are limited to the company, or even the fast food industry, there is no way that the revenue pattern for MCD would so match closely that of the entire S&P 500. The commonality screams macro.

ABOOK Apr McD SP 500 Revenue

Current projections for the first quarter add up to about 2.5% revenue expansion across S&P 500 companies, but, as last quarter showed, that is likely overly optimistic (fourth quarter revenue was believed to be expanding at near 3% at the outset of earnings season in January 2014, only to be revised lower to almost 0%).

In comparison to the pre-collapse portion of the Great Recession, current results are much worse.

ABOOK Apr McD SP 500 Revenue 08 Comp

The first nine months of 2008 were incorporated into a technical recession, though I wonder how much of the last three months of that year and the first three months of 2009 have colored people's recollections and skewed perceptions about what a recession might look like. The second phase of that event, utter collapse after the panic, is not likely to be repeated without financial threat and ruin of similar proportion. We should not expect similar downfall proportions (particularly factoring the preposterously weak "recovery" thereafter). That puts a spotlight on the comparisons with the first phase, which in its own right would have been the worst recession since 1982.

At the time, it was assumed that the economy was experiencing a "muddle", though that was not the term used then. If you go back and read contemporary commentary, particularly from the orthodox cohort, that is exactly the narrative that was being formed (regardless of actual data).

YELLEN. The strong incoming data on spending eased my fears that we are in or are approaching a recession regime of the sort embedded in the last two Greenbooks. However, given the numerous large and worsening drags on spending, a couple of months of data aren't enough to convince me that we are on a solid trajectory…

Janet Yellen's comment above, from June 2008, sounds no different than what is being said right now. What looked like "drags" on tepid growth trajectories was, at that moment, something worse – and would only grow far, far more destructive further on.

If there is one striking difference between then and now, it would have to be the evident bifurcation and stratification of economic station. There is a very narrow channel into which financial and asset inflation is fostering the impression of economic activity on the mend (autos, mostly, now that housing is in reverse). However, these results shown here conclusively dismiss any and all ideas that expect such narrow benefits to be the catalyst for more widespread economic revival. In fact, what we see, particularly in the comparisons to the first phase of the Great Recession, is that such doctrine of asset inflation and the "wealth" effect are wholly incorrect toward this updated "trickle down."

As is the case with so many other data points, there is clearly no imprint of QE 3&4 anywhere to be found. This is the only place where monetarism has been outwardly "successful", though I sincerely doubt it will be styled as such at some point in the future.

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VD's picture

endgame nearing...no kook phd can levitate foreva...

kaiserhoff's picture

I was talking to the manager of a local Goodwill complex last week.  He owns a house, bought in better times.   He and his wife both work.  He's run the numbers.  Obamacare is going to wipe him out.  They simply don't have a grand a month to waste on shit sick care.  Many of his friends are in the same boat.

He could look for another job, but if there were jobs he wouldn't be fucking around with retail.  As this phases in, so will the depression. 

svayambhu108's picture

http://www.globaltimes.cn/Portals/0/attachment/2011/6845aea4-705d-4e85-8...

 

US sufers a chronic phobia of bears:

Russia's bear

China's panda

Bear Market

El Oregonian's picture

We are being stripped "BARE" of our wealth.

It's not a phobia anymore.

Colonel Klink's picture

Not if government officials do it.

El Vaquero's picture

I have a different idea of what constitutes a crime than the government does. 

The Big Ching-aso's picture

I'm not YELLIN but a lot more higher paying jobs could prolly help.

Colonel Klink's picture

They don't care.  Their laws are enforced at the end of a gun.  Eventually the population will have to enforce their own at the end of theirs.  Same as it's always been.

FreedomGuy's picture

A lot of this is our own fault. I guarantee you not a single Congressman who voted for Obamacare knew how it worked or even if it would work. Very few if any even worked in healthcare. Yet, they voted for it and the leftist lemmings of the press and the larger population were all for it. We actually often support the things that will impoverish us.

The single most important impoverishing thing the general population supports is the general idea that there is some elite group of central planners that can run all economic endeavors better than free people. This near religious belief also trusts that these empowered central planners will work for the common good rather than their own good or the good of a highly connected private elite. I am not a conspiracy theorist but this precisely sets the stage for "bankster" elites and other invisible influences.

A lot of our own continuing economic weakness is in fact, our own fault. The problem is that those of us who do not believe the above are still forced to participate and suffer the consequences.

LooseLee's picture

"the general idea that there is some elite group of central planners that can run all economic endeavors better than free people."

This is the very definition of COMMUNISM!

Supernova Born's picture

The invisible hand cannot function when the iron fist of baseless fiat makes a mockery of markets.

 

Tengri Temujin's picture

We have a choice, we can do what the Euros do, spend less on military and socialize health care.  Or we can just keep building aircraft carriers and opening up military bases and run our country into the ground.

PTR's picture

"the general idea that there is some elite group of central planners that can run all economic endeavors better than free people."

This is the very definition of COMMUNISM!

And Hubris.

crazybob369's picture

Quite right FG. Same reason why so many believe in a God that's up there looking out for our well being and will protect us from evil, if we simply believe.  Easier than taking responsibility for our own well being.  Heck, if there is a God, for all we know he might be some really smart 3D programmer who created the universe because he was bored.....Oh, wait, isn't that basically what the Bible tells us.  Crap!  We're screwed.

svayambhu108's picture

Bearn Bearnake  is the captain :D

Colonel Klink's picture

I think you nailed it Kaiser.  After the passage of ObamaSCAM, corporations pulled back, consumers pulled back, and it will be a long slow grind downwards with no reversal in sight since the Rethuglicans (fuck both parties) agree that it's not going away.  Next nail in the coffin will be amnesty for ILLEGAL aliens.  And here I thought CONgress said back in 1985 it would be the LAST time.  Our "leaders" don't care about the health of this nation, only their own interests.

Best thing everyone can do is to go into survival mode.  Spend as little as you can.  Minimize your tax profile.  Eventually starve the eCONomy and the feral Federal Government.

therover's picture

" Spend as little as you can.  Minimize your tax profile"

+1000 on that one Colonel.

For the second one, I am buying physical gold and silver via a LCS that only takes cash.

Fuck all politicans from both parties. They are bought and owned by the billionaires and corporate/banking elites,  and suck their cocks any chance they get in order to fullfill their own interests.

The only way to kill a snake is by cutting off it's head. Choke off their money supply....fuck it, they are chocking off ours.

Colonel Klink's picture

Yep, that's a good course of action to take.  Why "lend" your money to the banks when the courts have already ruled in their favor that it's no longer your money if they can't repay it.  Works the same for the banksters, starve their system.

therover's picture

Colonel...you should see the look on the faces of some of my family and friends, when I tell them once they put their money in the bank, it's not theirs anymore.

They cannot comprehend that, but I think the more people start realizing that, things will change.

At this point, money in a bank is all risk and NO reward. Have just enough in there to pay the bills and that's all.

Colonel Klink's picture

It's hard to break through the societal brainwashing but it's much easier to do it with court rulings.

El Vaquero's picture

I've been known to kill and eat rattlesnakes.  I killed one once, gutted it, skinned it and took its head off.  15 minutes later it was still moving.  Creepy as fuck.  I think our government is the same way.  It's dead, but it doesn't know it yet.  So goes the dollar...

Oracle 911's picture

" Spend as little as you can.  Minimize your tax profile"

 

I is easy if you don't have money and live from paycheck to paycheck. LOL

JerseyJoe's picture

I call it - find a tax bomb shelter.   I live in NJ.  My real estate taxes on a 100X150 lot went from $1900 per yr to over $13,000 per year and no end in sight.   AND NJ is the most insolvent state in the union.  So does anyone in their right mind think taxes won't be going up to pay up in NJ.  (I sold my house before all the baby boomers wake up one day and realize they have to retire and their MacMansion is too expensive.  And who will buy? With higher rates and higher taxes and lower take home due to things like Obamacare.  Meanwhile jobs and people are exiting the state. 

AND...the Fed is holding rates artificially low, what do you think will happen to the interest load on states and the USG when rates start moving up?

BTW Liberal Obama supporter Bon Jovi lived near me - his real estate taxes were reported to be $450 per year on his massive river front mansion... Why?  He had the acreage to be a farm...so all he did was raise bees.  Libs love to tax people as long as it ain't them.  

But the lesson and back to your point...buy a little farm and raise some christmas trees or some food...for when the SHTF.  

Colonel Klink's picture

I believe there's a christmas tree tax already.  I'd stick with food.  You can't eat christmas trees....for long.  You'll be pining for real food.

Vampyroteuthis infernalis's picture

Christmas trees only sell during about 1 month in the year.

Colonel Klink's picture

Last I checked, food sells year round.

FreedomGuy's picture

But Christmas trees take no work or real expertise or time. If the tax dodge is your goal it is much easier. You can even hire someone to come cut them down for you.

Growing food and doing it well is work. Short of the economy tanking and food shortages, I would do Christmas trees or something else that is very simple.

post turtle saver's picture

yep, Christmas trees are a perfect cash crop for small acreage and it's basically "fire and forget"... good call... grow Scotch Pines and charge the buyers extra for shearing at Christmas time to get it in the shape they want... easy money

DirkDiggler11's picture

Easy money, except to grow them you need literally tons of herbicides and pesticides. My "neighbors" on three sides of me grow those damn things and they have their workers out in fucking space suits spraying the trees 4 times a year with tons of chemicals. Fuck the live Christmas Trees.

Grow food, not chemical coated BS.

Tengri Temujin's picture

I totally agree, fuck the Christmas trees, I just do a Menorrah and a little fake plastic Christmas tree for the family.  Everyone is happy, they just care about the presents and nothing else.  Heck I can just put the presents in the middle of the living room and they wouldnt even notice absence of a menorrah or Christmas tree.  Fuck the holidays and the retailers.

yogibear's picture

"(I sold my house before all the baby boomers wake up one day and realize they have to retire and their MacMansion is too expensive.  And who will buy? With higher rates and higher taxes and lower take home due to things like Obamacare.  Meanwhile jobs and people are exiting the state. "

 

"Libs love to tax people as long as it ain't them. "

It's  True. They yell and scream when their hit with taxes.

 

The key is to get out of places like NJ and IL where the unions will keep demanding higher and higher taxes for the unions and pensions. The politicians will keep giving the uinions what they want.

Colonel Klink's picture

IL and NJ, two of the biggest shithole states there are, right along with NY and CA.

SmilinJoeFizzion's picture

If Illinois didn't have Chicago it would be Afghanistan

snr-moment's picture

another bass ackwards ill-annoyin.

post turtle saver's picture

aw c'mon now, that's bs... IL would be ten times as productive as it is now if Chicago and Springfield didn't bleed downstate dry with taxes... easily some of the best farmland in the world... I have several relatives up in east central IL that operate 2000+ acres and the yields they get on corn & soybeans would stun you... there's a reason ADM is based out of Decatur folks, and it's not for the ambiance

PTR's picture

Because Illinois has Chicago it is Afganistan

FYP. =)

TruthTalker's picture

funny I'm from NJ and my BF is from IL - both states suck -

snr-moment's picture

Sell it or rent it to a family with 10 kids at a great deal for them.  That'll help starve the beast.

mumbo_jumbo's picture

I sold my house before all the baby boomers wake up one day and realize they have to retire and their MacMansion is too expensive.  And who will buy?

 

and there is the rub right there, who will fucking buy?  5 families of illegal (now made legal)peasants?  millennials with $50K in student loan debt making $10 an hour?  i know a boomer who has 5 houses and when we talk he says shit like "it'll come back it always has"  and i always reply "until it doesn't" and all i get is that deer in the headlights are you crazy stare as he ponders that thought.

kchrisc's picture

Obamacare could be the concrete block that breaks the camel's back.