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The Recovery Itself Unravels; Consumer Recession
Submitted by Jeffrey Snider via Alhambra Investment Partners,
If March was supposed to herald at least the beginning of the anticipated yearly rebound, April put that idea to rest. In terms of retail sales, one of the most important and largest segments of “demand”, April’s figures were mostly the worst of the recovery and some of the worst in the entire series – “beating” out February in every category. Even including autos, total retail sales gained just 0.72% in April more than suggesting there really is a major economic problem brewing.
Among the other segments, the figures are getting truly dire (all numbers are year-over-year not-adjusted): retail & food sales ex autos -0.35%; retail trade incl. autos –0.26%; just retail ex food ex autos -1.80%; general merchandise stores -1.52%. While these numbers are severe on their own, this is a contractionary environment that now stretches at least four months and in some cases five. Recessions are not spontaneous events but rather the accumulation of negative pressures and results. There can be no doubt that consumers in the US right at this moment are acting out of recessionary impulses.
The accumulation of the past four months is indistinguishable from results of the past two recessions (apart from the collapse after Lehman):
The negative Y/Y changes, which are actually quite rare, place April 2015 among the very worst economic months of the entire series dating back to 1992.
In addition to registering these atrocious results, the trajectory continues on in the “wrong” direction. In other words, not only is the US economy accumulating contraction the outlook isn’t indicative of that changing anytime soon. Households are pulling back, staying back and doing so rather quickly.
We have pushed way past last year’s “aberration” in the polar vortices and way past even the immediate aftermath of the 2012 slowdown (which hit in the also-snowy winter of 2013). You can make the argument that the full US economy is not in recession but it is now exceedingly difficult to sustain any position that doesn’t put the consumer already there. With capital goods spending equally unstable and sinking, as well as the “dollar” yet having companies cut back in all major costs, it is very troubling that these highly negative estimates have occurred without the much larger and heavier recessionary forces that are still likely as downstream events; those would include the as-yet oil sector retrenchment.
Furthermore, there is still the massive inventory overhang that has been accumulated in the last year or so likely upon the word of economists that what has already occurred was impossible. That places even further emphasis on the downsides still coming up as that inventory will slow the entire supply chain liquidations first. In other words, if this is a consumer recession taking shape then the full economy is just now seeing the leading edge with the worst, potentially, yet to come. The world that Janet Yellen was talking about late last year is completely gone and there isn’t much left of even hope to salvage it; though I suspect they will keep trying to the last inappropriate data point.
I wondered a few months back what it might look like if a recession were to form without ever having gained a recovery from the last one – consumers already in the bunker. The initial results of that are not encouraging as the economy has been serially overstated anyway and the real recession hammer has yet to strike. Maybe the bond market is correct and that another QE is coming, but at this point all that may do is as the last few did, namely put off the inevitable without any real economic upside; and that is the best case. While that may be great for stocks (though it may not be) I suspect the expiration date on QE and monetary magic may be rapidly approaching. It already has for “demand.”
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Voters will not thank Democrats for this in 2016.
Sure they will. The MSM will be sure to let all and sundry know that it was all the Republican's fault that it's all going to hell and the voters will pull the trigger for D again. When you control the media and the education establishment, you control the ballot box.... Not that pulling R would be any better, though....
Disagree. The republicans will sweep. There will be no energy in the democrat party.
But like you said, doesn't matter.
We are going to hear all though out the entire 2016 cycle that the 2016 depression is 100% Bush's fault. It will be repeated loud enough and often enough that 51% of the population will believe it, that's all you need.
Not that I want the R's in office either.
Again, I disagree. Like I commented below, the democrats can't win without turnout. That is their achilles heel. The only reason obama won in '08 was because of turnout. Hillary is not going to do it. She loses to whoever runs. Also likely is a nader scenario.
All the data is ex-autos, but it's not like car/truck sales are going to save the country anyway. Loan terms are terrible and subprime is rising. Housing? Fuhgeddaboudit! We're toast, burnt and tossed in the trash. Chinese "humanitarian" soldiers in the US to help out with rioting and disease in less than two years.
Went into town to get a filter and oil for my truck and again it looks like a ghost town with few cars on the road.
Even the auto parts store dudes seemed tense. But I didn't ask how things were going either.
I disagree. Hillary can gin up as much turnout as she wants among all the groups she needs by promising enough free stuff. The Hispanics get open borders. The Millennials get free college and nullification of all student debt. The Blacks get slavery reparations. The liberals get everything else. That should be enough to produce the turnout.
If there is a 2016 Depression the only argument they need to make is ideological. The Democrats will spend lots of money and the Republicans won't. In deflationary conditions, the public wants Democratic remedies to be implemented.
Not that I think there is going to be a 2016 collapse anyway. Janet Yellen won't pull the plug unless a Republican gets elected.
LOL! yes, fucking irrelevant. Another member of the oligarchy (Bush or Clinton) will win.
Wake up guys and gals, get you own dependable tribes together and simply recognize that none of these sociopathes are playing by any rules and neither should you!!
Depends on who is elected. The Jebster? Not a reform-minded bone in his body.
Walker, Paul, Cruz or Rubio...maybe. Personally, I think Congress is staffed with mostly cowards. If the President pulls on the reins, they'll comply.
Had to downvote you for the use of "elected". Our masters are not elected. They are selected, and not by you or me.
Which is why those who are truly at fault for the mess we're in is anyone who continues to vote and give any semblence of legitimacy to this farce of a political system.
Who needs energy when you have 30 million illegal aliens voting for you? They have California, Florida, NY, and Illinois in the bag. That's about 50% of the electoral votes needed to win.
That's going to be a tough case to make, since the Republican Senate only got seated in February. Maybe they went back to Q4 2014 in a time machine to wreck everything?
You expect the American public to show intelligence and logic?
The media will focus on one stat and one stat only - official employment numbers. On paper it looks great. They're hell-bent on putting Hitlery in the office, so it has to be democrats and the story of how everything worked out hunky dory.
Not like there's any actual difference between the parties or the candidates anyway. Hillary seems like a bitch from hell, but she's not worse than any of the interchangeable banker sock puppets. The job of the president is not to direct the policy, but to sell it to the public. The president holds no power whatsoever.
If voting mattered it would be illegal.
Nobody is voting one way or the other because of the economy. We vote based on who promises the most stuff to the FSA. From welfare queens in the trailer park to corporate welfare queens on Wall St., it's all about the government and your relationship to it at this point. The concepts of liberty and free markets now only a grim jest and the object of public ridicule.
So true. When people in a Republic learn to vote themselves wealth (aka Free shit) then the Republic is doomed to fail.
I plan to vote for the label that best symbolizes all the good things my TV tells me I can have if I only, ... uh, ... I forget. Rats.
So a Turd party candidate then.
A Turd is the only candidate I would vote for.
Turd Party Campaign Promises:
No salary or benefits
No need for supporting staff
No new laws
No new taxes
No lobbyists
No new wars
No more spending/pork barrel bills.
It's a straight up "Turd ticket" for me:
Turd for President
Turd for VP
Turd for Senate
Turd for Congress
Turd for Governor
Turd for Mayor
The Turd Party = the Winning Ticket.
I plan to vote for the label that best symbolizes all the good things my TV tells me I can have if I only, ... uh, ... I forget. Wait a minute. No. TV's tryin to shush me for some reason.
Oh but your wrong. They are morons. They will vote hillary in and then it will be time to move somewhere more......rural.
After all, they elected the corporate/wall street shill obama.
never underestimate the stupidity of the average voter
This isn't confusing. Record high rents, high home prices, student loans, high taxes, high tolls, increasing health care, and a shitload of debt. No one is going to spend.
i fucking wish we were in a recession, that would signal major improvement from where we r today.
dont worry though, everything is awesome, the dow and the s&p will close at record highs today. let me go buy some stawks now
Bring on the recession/depression!! Shit! I'm so close to the bottom, I won't know the difference!! lol
The vast majority of Americans have in the Great Recession/Depression since 2007 and the fuckheads/so-called Elites are having the times of their lives on the "sweat and toil' of those vast majority of Americans...
As you know, the only problem is that if the economy were in a recession, the Fed would unleash even more money and push stocks and bonds even higher. Perversely, the only thing to stop the market now is a strong economy which gets people worried that the free money train may come to an end.
The bubble/bust Greenspan doctrine is to push the markets higher no matter what and hope it turns out well. Everyone outside the central banks knows that decoupling asset prices from economic reality by a wide margin is an accident waiting to happen.
When your economy is already on double secret probation there's only one thing left to do. Toga party.
"I wondered a few months back what it might look like if a recession were to form without ever having gained a recovery from the last one – consumers already in the bunker."
They'll dig a sub-basement in the bunker. Trust me on this. What I really would like to know is what it's going to be like if we go into a recession (within the overall depression, mind you) and the Fed out of policy bullets. Not one of us has likely ever lived through a recession in our adult lifetimes without the Fed able to lean into it with ever lower rates and greater liquidity.
"Not one of us has likely ever lived through a recession in our adult lifetimes without the Fed able to lean into it with ever lower rates and greater liquidity".
Yep, and that is why this time it "is" different.
Contrary to what the blow hard bullshit financial "experts" keep saying, the un-fed has painted itself into a corner and did so a long time ago. They will not stop though, it's full steam ahead. This bitch will blow, I don't know when... but it will, as we all know.
With all the talk and media assists about raising rates, I wonder how the FED is going to about face and go QE4. Hilsenrath to soften the about face with some articles again?
They seemed so convinced about raising rates, they simply debated the date. Is something crumbling we're not seeing? I should say, in addition to what we are seeing.
What if the FedRes WANTS to cause a collapse now ?
They need something horrific to herd the sheeple into the SDR regime.
There is always an ulterior motive wwith TPTB.
What are the options:?
A) Admit everything done since 3/2009 was a mistake and now, in the face of another recession, reverse course and raise rates?
B) Keep chasing the rabbit down the hole in an endless game with other CBs?
C) Board the jets in the middle of the night for undisclosed destinations?
Goldielocks! We're at peak everything and the ship's still sinking. Goldielocks!
hahaha +1 for Toga party
"I wondered a few months back what it might look like if a recession were to form without ever having gained a recovery from the last one – consumers already in the bunker."
Man you have to occupy a seriously bizarre warped mental space to take this seriously. I'll stick with the metaphor. Here's a thought for Alhambra Partners: what if consumers are not only not in the bunker, but still in the entertaining room hosting a dinner party? Hmm? What if we have not seen anything yet? What if the mean to which the reversion is heading is not 2007 or 2001 or 1999 or ... but 1949 or 1919?
And why exactly would that be such an unimaginably terrible thing? I don't know about you but I don't know any parents/grandparents who lament the endless horror story of their youths, unless they happened to be caught in a war (which we still have plenty of today) as civilians.
Only in a hyperdecadent fantasy-land does nonnegative YoY growth - not my terminology - constitute "in the bunker" economic conditions. The problem here is the deeply embedded meme about growth being the default state of society and economy based on about 100 years of evidence for a 100,000 year-old lifeform. That's rather like concluding that the default state of a gun is "firing bullet" when, during a 1 hour period, the gun is discharged once.
somebody trying to get out of the real estate market ... bubble much?:
CalPERS puts portion of timber holdings up for sale; seeking buyer for 300K acres in US SouthEast - DJ
CalPERS just wants to buy Apple.
and SHOCKINGLY i came across this lol:
U.S. Plains, southern Midwest farmland values fall, more weakness seen - Fed - REUTERS
http://www.reuters.com/article/2015/05/14/usa-farmland-idUSL1N0Y50O120150514
http://www.breitbart.com/big-government/2015/05/07/farmland-prices-down-...
Democrat voters are very dependable. The flow of free shit must not slow.
As for the economy, given the last 7 years, it's looking bullish for stocks and you know why.
"Democrat voters are very dependable."
Democrats are dependable when they show up. That's the hitch.
Refer to the following clips from Homer Simpson about voting.
All you need to know.
https://www.youtube.com/watch?v=IoWJkrlptNs
https://www.youtube.com/watch?v=rAT_BuJAI70
https://www.youtube.com/watch?v=FlcngdW2Ju4
GDP Now forecast for Q2 GDP just ticked down to 0.7%
Tis just the doom the market needs to make new S&P highs tomorrow.
Overlord Obama "There's no recession, look at the stock market!!"
screw this...we're on the verge of a serious shooting (& nuking) war....fucking A
http://freebeacon.com/national-security/pentagon-building-up-forces-alli...
this better get resolved by the end of June or it's war
Its going to be war anyways.Its (or soon to be,was) the human way.
Pax Americana isn't going quietly into that long goodnight.
You make more sense that the article. I don't know how Alhambra gets it's numbers and the numbers seem small although their numbers are larger than what I saw in FRED Data yesterday.
But yeah, Massive Money printing that was transferred to the Wealthy Money Trust, Exponential growth in FISCAL Spending and FED Reserve Balance Sheet, Stimulus through LIRP/ZIRP,... accompanied by loss of wealth, retirement, and high debt in all sectors...
Collapse and War seem predictable.
FRED Data is only April 2015 for this... but doesn't look that bad.
Retail Sales and Food Services Excluding Motor Vehicles and Parts Dealers
2015-04: 347,004 Millions of Dollars (+ see more)
Monthly, Seasonally Adjusted, RSFSXMV, Updated: 2015-05-13
http://research.stlouisfed.org/fred2/series/RSFSXMV
It's all meaningless drivel until the fed exits the financial markets.
.. which will never happen. Even if they tried to actually exit they would just step right back in to prop it up when it crashes because they're trying to exit.
I heard an ad on the radio for some gold outfit today specifically calling out the "next step" being the "Bail IN" and cited what happened in Cypress. Those stories are becoming more numerous and more public, first time I've heard it mentioned on the radio. Won't be tomorrow or the next day, but one day sooner than we know we will wake up to an announcement like in Cypress and it will be too late to withdraw your dollars from the bank/401K.
"Maybe the bond market is correct and that another QE is coming, but at this point all that may do is as the last few did, namely put off the inevitable without any real economic upside; and that is the best case."
No more QE is coming. The debt bomb is about to explode and those writing the checks will realize no amount of bond buying will stop the financial explosion.
http://www.globaldeflationnews.com/big-volatility-shakes-bond-investors-...
Thanks for the link. Essentailly directs you to the most recent Elliot Wave Financial Forecast, which I already subscribe to. If you ZH heads want an outstanding newsletter on the economy, stock markets, precious metals, bonds, the dollar, and consumer sentiment- Elliot Wave is hand down the best contrarian newsletter out there. I have been a subscriber for many years and can't do without it. Very inexpensive also. And no-I'm not a shill for them trying to boost subscriptions.
Yeah, we are all selling and buying on Craig's list and other black market sources.
Sell out of the bank of the SUV, veggies, etc. Taxes? Ummm....well....
Fed was a bank.
Fed is now a market maker.
Audit the Fed.
And fuck you yellen!!!
The very wisest thing people can do once recession/depression begins for real is just stop paying back on all loans to banks. If everyone does that the banks will collapse. What are they going to do if half the worlds population refuse to pay these greedy c***suckers. Send armies and police on their doors and force them to pay? Put them in prison? If people stand together they won't be able to do squat.
I agree.
The stock market is cheering the news!! Recessionary economy...more QE!! More QE...higher PEs!!! Just keep those non-GAAP earning moving higher and stock options for execs flowing!!
What could go wrong??
The stock market is cheering the news!! Recessionary economy...more QE!! More QE...higher PEs!!! Just keep those non-GAAP earning moving higher and stock options for execs flowing!!
What could go wrong??
Seems this bullish news of late has been the catalyst needed to nudge stocks out of the bullish consolidation and into the next leg higher. It's still technically a dip so if you are one of those slow learners you still can buy now at a discount before we are making daily all time highs again on our trip to infinity and beyond.
The whole continued existence of the developed world is contingent on ever increasing equity prices so guess what is going to happen?
Bad news is good news.
So rejoice buy an index before QE is announced.
One of the basic and most fundemental rules of economics is marginal utility. Most professors I've encoutered try to explain law of diminishing marginal utility with funny examples. Like if you are thirsty, the first beer you drink has the largest utility for you. After that, each and every additional beer becomes less and less worth. Eventually you pass out! Same goes with the economy and money.
It's funny that the same people who teach these basic mechanisms of economy to students around the world are the very same ones who are driving the economy into the abyss...
Hypocrits?