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Did The American Consumer Just Unwittingly Call The Top?
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
Hey! Who said economics can’t be fun?! How is it not absolutely brilliant that in the face of a collapsing shale oil industry – or at least, for the moment, of its financing model -, and the worst week for the Dow since 2011, the Thomson Reuters/UofMichigan consumer sentiment index shows American consumers are more optimistic than they’ve been in 8 years, and that “more consumers volunteered good news than bad news than in any month since 1984″? 1984! How does one trump that as a contrarian signal? And that I don’t mean to sound funny: that is serious.
Of course it says something too about US media and their incessant messages about how well everything is going and how we’ve passed that corner the recovery was always just around, and what a boon the falling oil prices will be to spending over the holidays, and even if sales instead fell over Thanksgiving; surely that’s only because people were saving up their newly found extravaganza for the Christmas season. And obviously the Fed-sponsored distortions of all asset prices on the planet, homes, stocks, you name it, have a lot to do with stoking that optimism as well.
But the feat stands on its own two feet just as much. Americans are not just behind the curve, they positively confirm a top has been reached. If ever you needed a sign, here it is: “Their expectations run quite counter to recent price data.” That’s from Jason Lange for Reuters, but before he gets around to that, check out what some of the experts he cites have to say:
After Years Of Doubts, Americans Turn More Bullish On Economy
Pessimism and doubt have dominated how Americans see the economy for many years. Now, in a hopeful sign for the economic outlook, confidence is suddenly perking up. Expectations for a better job market helped power the Thomson Reuters/University of Michigan index of consumer sentiment to a near eight-year high in December, according to data released on Friday.
U.S. consumers also saw sharp drops in gasoline prices as a shot in the arm, and the survey added heft to strong November retail sales data that has showed Americans getting into the holiday shopping season with gusto. “Surging expectations signal very strong consumption over the next few months,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
While improvements in sentiment haven’t always translated into similar spending growth, consumers at the very least are feeling the warmth of several months of robust hiring, including 321,000 new jobs created in November. When asked in the survey about recent economic developments, more consumers volunteered good news than bad news than in any month since 1984, said the poll’s director, Richard Curtin.
Moreover, half of all consumers expected the economy to avoid a recession over the next five years, the most favorable reading in a decade, Curtin said. The data bolsters the view that the U.S. economy is turning a corner and that worker wages could begin to rise more quickly, laying the groundwork for the Federal Reserve to begin hiking its benchmark interest rate to keep inflation from eventually rising above the Fed’s 2% target.
Overall, the sentiment index rose to a higher-than-expected 93.8, mirroring levels seen in boom years like 1996 and 2004. Many investors see the Fed raising rates in mid-2015, and policymakers will likely debate at a meeting next week whether to keep a pledge that borrowing costs will stay at rock bottom for a “considerable time.” Consumers see faster inflation ahead. Over the next year, they expect a 2.9% increase in prices, up from 2.8% in November, according to the sentiment survey.
Their expectations run quite counter to recent price data. The Labor Department said separately its producer price index dropped 0.2% last month, brought lower by falling gasoline prices. Prices were soft even excluding the drag from gasoline. U.S. stocks briefly cut losses after the buoyant sentiment data but stayed lower on the day as investors fretted about declining oil prices and what that said about global demand.
About those recent data, the New York Times says:
Inflation has been below 2% for most of the last two years, and falling gas prices could drive it even lower. Partly because of cheaper gas, the Consumer Price Index was unchanged in October from the previous month. Compared with 12 months earlier, consumer prices were up just 1.7%.
I think maybe I should just leave it at this. The American consumer has spoken, and (s)he’s called a top. Whether that’s just the top in consumer sentiment or also one in the stock markets, let’s see, but I lean towards thinking both is a realistic option, because of the way energy credit fell to pieces in no time. It looks like a harbinger for a – much – wider segment of the economy, and it feels like something’s profoundly broken.
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In this already shit-and-piss economy, the bloodbath that represents McDonalds sales figures is a sure sign of the top/end.
Worst week? 3% off ATH.
Funny
Never underestimate the stupidity of Boobus Americanus.
does anyone here actually believe the consumer sentiment number is real? coming at the most "opportune" time possible?
but yes the consumer did call the top with Black Friday sales down 11% and it wasn't inadvertent.
Yes, the U of M monthly data used to be both accurate and reliable. Apparently "Thomson/Reuters" have indeed taken over and specify the results required in advance of the actual survey.
the American people really are Homer Simpson. I am ashamed but we will get what's comming to what we have become. a nation of yellow suckers
when the government tells you you've almost won the war it's a sure sign that you are about to lose the war
I BELIEVE I CAN FLY !!!!
So why are sales at Chipotle and other more expensive chain restaurants through the roof?
Perhaps because you can swipe your SNAP card there?
Regardless, they are up, right?
So McDonalds sales don't mean squat.
Except McDonald's is 35,000 stores while Chipotle has fewer than 1,000. McDonalds sales are down 5%. Chipotle sales have to increase 250% to make up for it.
Good try, moron.
You can get a large pepperoni pizza and 2 liter soda at Papa Murphy's with your EBT.
Because most people can't cook to save their lives.
While I do agree that the US consumer is tapped out and the economy is headed down, I don't think McDonald's sales can be representative of the greater economy. More likely, people are figuring out how incredibly unhealthy their food is and are making alternative decisions, ie Chipotle and other less toxic restaurants sales increasing.
people are willing to spare the extra change for real food, not slime in a tube
Chipotle is expensive? It's only 25-50 cents more than a McDonald's Big Mac combo. It's cheaper than some of their other combos. If you're talking about the dollar menus, then it's more expensive.
You must be one of those idiots who bought the line that peolpe are so wealthy they no longer want to buy things on sale and don't mind paying full price. They also no longer eat at fast food, and are eating at 5 star restaurants.
I thought gas prices weren't used in figuring the CPI
Ooops! The hymen has been broken in the virginal market.... Janet and Benji may need to talk to Miss Bum Bum about how she cosmetically got her hymen re-virginalized.... '
http://www.dailymail.co.uk/femail/article-2867128/Winner-Miss-Bumbum-2014-goes-knife-restore-virginity-reveal-results-risqu-new-photos.html
The supreme elites of stupidity.
"the Thomson Reuters/UofMichigan consumer sentiment index" LOL!!!
Try to get a respondent breakdown, go ahead an try.
The Cromnibus upped the welfare... Why should they not be jumping for joy?
I thought the CPI excluded food & energy.
Does anyone else think the Thomson Reuters/UofMichigan consumer sentiment index is a concocted pro-gov't-business pile of perception-management bovine you-know-what?
The American consumer hasn't spoken. Stories saying they've turned bullish are just bullshit "push" propaganda trying to get that idea into the public mind, but no one is buying it.
Not if you talk to a fucking Obamavik liberal douchebag.
Fuck...I read some shit last week in the editorials from some dumb ass that "the recession is over", and such fucking nonsense like the unemployment rate is low - jobs aplenty. THEN I read days later some other stupid fuck chimes in and agrees with him. The fucking paper ran the fuckers "op-ed" - as dumb as a jackass.
So, there IS and ARE fucking dumb ass stupid fuckers out there. The bought off, dickless media gets to some of these WalMartians...
Gruber was right - many Americans are just simply fucking stupid.
What makes you think those editorials are legit?
Perception management, fake tweets, astroturfing and the like is probably one of the only growth industries in the US right now. Even the mosted cracked-out Obama droids I know of think the economy is shit v. five years ago. (They blame Bush, of course.)
Things are falling apart, and they're doing everything they can to wallpaper over this, thinking somehow if people believe things are better it'll come true. Nothing you see regarding the economy improving in the MSM is legit.
This to and fro between Tyler and Dennis Kneale on CNBC is funny. This was 5 years ago!
Dennis Kneale Takes On Zero Hedge...And Fails (Clip)http://dailybail.com/home/dennis-kneale-takes-on-zero-hedgeand-fails-cli...
I concur. I did think of that, since this mullet wrapper is run by dimwitted bloated fucktards who lean so hard left their cars list and are cattywhompus.
Lots of anti-motherfucking Amercians infesting 'Merica these days. Stupid dumb fuck white guilters, who support the blacks - who abort 66% OF THEIR NEW BORNS - and "Black Lives Matter"........
NO THE FUCK THEY DON'T....AND THEY HAVE THEIR OWN STUPID "RACE" TO BLAME FOR IT..
..but you'll never read that in the lilly-livered, fucked up news press - or even on the net, as the presstitutes and bought off jag offs rake in the dough from the gullible and moronic.
HERE IS THE REAL ECONOMY:
There are no real career jobs anymore period
Only part time or contracting at a low wages while the basics of life are very expensive
everyone is renting , no one is buying houses (I am one of them lol )
For fuck sake even the baby boomers are still in the work force in force (that should tell you everything)
Love your way with English. As a non-English native speaker I truelly admire your missive that at the same time is packed with content and open to clear interpretation.
And yes - people do fall too easily for canned propaganda.
Questions asked for bullish economy survey:
Do you have a pulse?
Are you breathing?
Are you employed or receiving any form of government assistance?
If you answer yes to any of these 3 then the economy is looking great and is very bullish.
First off, bullshit!
I don't know who they are interviewing, but no one I talk to thinks things are fine. The ONLY people who say that are the talking heads on TV, and politicians.
You guys don't believe their stats on anything else...why do you give THIS any credence?
Give me a fucking BREAK!
Observer, you've got it backwards. Polling/surveys are used to shape public opinion, not measure public opinion.
Forward (over the cliff)!
Exactly. As ZH reported just two days ago, the U Mich consumer confidence survey released this week beat expectations -- by 5 standard deviations!
This isn't real data. That the gap between the report and reality gets wider and wider just shows how bad things are.
It'd be great if Tyler would re-run one of the comparison charts showing the gap in confidence v. other measures. I remember in '09-'10, the gap was huge. If anything this strong showing is predictive of just how bad the situation is.
It really does matter who they're polling though. I live in a vacation community adjacent to San Francisco. Going by the public opinion of these idiots you'd think that it was 2002 again. "Everything is Awesome..."
You're overthinking the statistics and accepting the polling as vaiid (or even being done) but has some sort of selection bias influencing the outcome -- the metastatistics I discuss elsewhere in this thread strongly suggest the number is simply being made up, e.g. this isn't a methodology problem, but an outright fabrication.
This particular data set is notorious for consistently failing basic statistical sanity checks.
we've always been at war with Eastasia
Has anyone here ever received a phone cal lfrom one of these polls? I don't know of anyone, friends, co-workers, or family, that have been a part of these polls. How do we even know anyone is interviewed?
@Bad Attitude
you nailed it
+100000000000000000
Is there a place you can go to see who they interviewed, how and what questions were asked? The results do seem serioulsy out of step with reality and what you see in the street on a day-to-day basis.
Here's the survey web site.
The questionaire used is one of the links on the main page.
The sad reality is that consistently when it's politically expedient for there to be a big jump in confidence, that's exactly what happens and I'm quite sure if you had actual access to the raw data for an extended time period (say two years) you would not be able to generate the claimed index results each month with the data supplied. As Tyler pointed out just a couple days ago, the latest figure is five standard deviations above expectations -- something that should happen once for every 1.7 million data points (and, at the rate of 1 data point per month, once every 145,000 years or so.) So the statistics of the "results" of the survery reveal in themselves that the number is utter bullshit.
It's also worth mentioning that the widening gap between reality and perception management makes perfect sense. In other words, as the loss of control of the system accelerates, so does the (perceived) need to exaggerate the opposite narrative.
University of Michigan Consumer Sentiment Index?
Who the fuck listens to a bunch of lunkheads in Michigan?
Jesus Christ! These people cut holes in ice and stand there fishing.
This proves it doesn't take much to make them happy.
Pizza Bob's!
the consumer sentiment index tracked the stock market until this latest recovery. it should be sitting at 200 right now (instead of in the mid 80s or whatever) by looking at the s&p. not good.
You should never argue with a crazy fed
You oughta know by now
You can pay Uncle Sam with the overtime
Is that all you get for your money?
[/billy joel]
The sheeple are the majority
Last time I saw articles like this was peak-tech-bubble.
http://www.dailymail.co.uk/news/article-2873411/New-York-high-school-stu...
Certainly it's about market fundementals...
Either the oil market is being manipulated (Heavens to Betsy) or Stanley Fischer has repealed the Law of Supply and Demand.
If the price of oil continues to fall over the next several months it's safe to assume that global demand for oil wasn't improved by lowering its price.
And without a marked increase in demand from a cut in price of 66.7%, it's time for us to check that inventory of yore:
May just be my area or everyone is shopping on line, but I just left a Home Depot and Lowes, like a ghost town both places. Just a hand full of shoppers/consumers.
Perhaps they are all shopping in "upscale" stores. Or the last minute shoppers will blow the doors off!
Nothing says 'Happy Holidays' like a shovel!
Not as well as as ironing board for Mothers day,but close.
The anonymous Fathers day cards by USPS, always work well.
Can be deceptive. There's been a massive transfer from bricks and mortar to online.
Can be deceptive. There's been a massive transfer from bricks and mortar to online.
Or it could be we boomers. I don't leave home to shop. Son, who has had his beady eyes on my Foxfire series, well he is getting a couple of pound worth this Xmas. Daughter-in-law gets a Disney character she is always admiring. Daughter gets a piece of her grandmother's crystal. She loves crystal. Son-in-law gets what he gets every year, a silver dollar. Granddaughter get he father's Fisher-Price Circus Train, loving wrapped in plastic and stored for the last twenty years. Wrapping, bows, name tags from last year. Friends get jars of pickled jalapena and kumquat-satsuma marmalade. Total costs $22.58.
Upside, children enjoy these things now, and I don't have to dust! Win-Win!
I tell the spouse that the "new" Christmas is the "no-gift" Christmas. Just because the magi brought gold and myrrh and frankincense to the baby Jesus dosn't mean we have to buy new electronic gadgets for the kids.
Maybe the gifts you give your kids are your time, attention, and love. Not as exciting as a new Xbox but infinitely more valuable.
But will the yuppie be brought back from the brink?
This is all that matters in terms of global "growth".
If we dont have shop-till-ya-drop and tasseled loafer-envy then the whole global arrangement is toast.
And that depends much less on confidence than on the buying power of the dollar.
The best thing about "December Spin/Hype" is that it totally disappears the day after Christmas. It doesn't hang around like the second hand smoke in your new sweater that you wore to the New Years party at work.
December Spin/Hype has a job to do. During the last month of the year (actually from Thanksgiving night until Christmas Eve), its job is to make you believe all is well with America's economy and it would not be amiss to charge $150 per gift that you can't afford, instead of the planned $100 that you can't afford.
It certainly makes the government's lies and life a little easier when they report retail sales in January.
The truth will make your free.
No because the truth will crash the system and then you'll be under martial law. A bunch of dead motherfuckers, excluding us, is what will make you free.
we propagandized some gullible goyim
I would suggest this is not surprizing. I would suggest that the majority of consumers do not own oil stocks nor work in the oil industry, and know or care little about anything. But they do know that lower gas prices are good for them.
The hymen has been broken in the virginal market.... Janet and Benji may need to talk to Miss Bum Bum about how she cosmetically got her hymen re-virginalized.... '
http://www.dailymail.co.uk/femail/article-2867128/Winner-Miss-Bumbum-2014-goes-knife-restore-virginity-reveal-results-risqu-new-photos.html
I ate at one (there are several) local mexican restraunts friday. 4 enchilada platter with sides and free chips. $7.99. Real food. Could barely eat it all. Other day my bud I went thru BK and got 2 whoppers, cookies and 2 cooks. Amost $14 and no fries.
The American and world economy is in uncharted water and weird crosscurrents are clouding our economic future. Last quarter America's GDP came in at a strong 3.5% but the fact that a 10% jump in federal spending, mostly on Pentagon hardware bolstered growth and was very much behind the numbers. This "pre-election" spending was the biggest increase in federal spending since 2009 when the Obama administration put in place a huge economic stimulus package.
Mix in an upbeat November number concerning job creation, falling oil prices and ever higher stock market prices and new record highs and many people have the impression we are on a roll. The truth is if this market is as over extended and distorted as many people think a crash may occur at any time. The article below delves into some of the many crosscurrents at work that could bring the economy to an abrupt halt.
http://brucewilds.blogspot.com/2014/12/crosscurrents-cloud-future-economic.html
Consumer sentiment surveys.... Depends on who is surveyed, and careful scripting for "right" answers. And big bucks for "right" predictions.
Who really believes them?