This page has been archived and commenting is disabled.
This Wasn't Supposed To Happen: Household Spending Expectations Crash
One of the biggest drivers of the so-called recovery (in addition to the Fed's $4.5 trillion balance sheet levitating te S&P500 and the offshore bank accounts of 1% of the US population) has been the US consumer: that tireless spending horse who through thick, thin, recession and depression is expected to take his entire paycheck, and then some tacking on a few extra dollars of debt, and spend it on worthless trinkets.
Sure enough, for the past 8 years, said consumer has done just that and with the help of the endless hopium and Kool-Aid dispensed by the administration (who can forget Tim Geithner's August 2010 op-ed "Welcome to the Recovery"), and by the political and financial propaganda media, spent, spent and then spent some more hoping that "this time it will be different."
This all came to a screeching halt earlier today when courtesy of the latest New York Fed Survey of Consumer Expectations, we learned that the US consumer has finally tapped out. Households reported that they expected to increase their spending by just 3.5% in the next year, a major drop from the 4.3% the month before. This was the lowest reading in series history.
Worse, when adjusting for household inflation expectations, which have been relatively flat if modestly declining around 3%, real spending intentions, when adjusted for inflation, just crashed to a barely positive 0.5%, down over 60% from the prior month. This too was the lowest print in series history.
Think America's poor have finally revolted, and refuse to spend any more? Think again: the biggest culprit in the collapse in spending intentions was the middle class (those making between $50 and $100K) but mostly the wealthy, those with incomes over $100K. It was the latter whose spending expectations dropped to, you guessed it, the lowest in series history.
Needless to say, this was not supposed to happen.
Worse, in an economy where 70% of the GDP is in the hands of consumer spending, a collapse in spending intentions to multi-year low levels means just one thing: recession.
The only silver lining is that since the source of this data is the Fed itself, then Yellen will surely be aware of the dramatic shift taking place within the biggest drive of US economic growth. Which is why for all those wondering just what caused today's market surge which was driven not by China's collapsing economy, but by the realization that the Fed will not only not hike in September, but probably won't hike in December, or ever, just look at the first chart above.
Source: NY Fed
»
- 57490 reads
- Printer-friendly version
- Send to friend
- advertisements -
Please click [here] to see the squad of cute cheerleaders.
I didn't help .... I repaired my French coffee press .... the plunger rod came unscrewed .... from the filter screen !
And let this be a warning to consumers! If you don't scratch up some more to go out and spend so the government can get their cut through taxes, they're just going to come and take it from you directly. Saving money is an unapproved activity in the US.
This chart says the FED is likely to raise rates in September:
http://www.booktrakker.com/Economy/UST1Year.jpg
The market always leads the FED, and right now the market wants higher short term rates.
If you know nothing else about the US financial system, then keep one thing in mind:
THE FED KNOWS ABSOLUTELY NOTHING -
ABOUT THE BALANCE SHEET OF THE AVERAGE AMERICAN FAMILY !!!
well i can tell u one thing
i am getting sick of buying things...
i have wasted more money these past 2 years buying when that money could have gone to gold
I am finished...
Wouldn't it be fun to get as much credit card credit lined up and have a "National Credit Card Day" where everyone goes and maxes out their cards on metals like gold, silver and lead....then just don't pay it back...default. They can't take your house and they can't find your metals. I believe this would boost the economy and kill the banks and we all have a great time!!
Croc, a quicker death to all the banks would be just go downtown and remove all your money from savings and checking.
Boom.
Game over.
Mebbe what the chart is saying is that the money is actually going into the non-trackable, non-taxable black market.
Hmm?
ppl don't get much for raises
i mean where i work most everyone got around .30 cents like that is going to make much of a difference...
and what really bothers me is that ppl's attitude is "better than nothing"
Huh? fuck that.
I am complaining to the ppl on top and get out my 2 cents...
what a bunch of crap
and to make it clear i work for a company that is making a huge profit and doing well.
fuck this
Yeah, you got a 30 cent raise AND now "Johnny" do not talk to anyone about that. The good thing is there is nothing to talk about. The bad thing is; there is nothing to talk about...hang in there.
As one ZH'er stated below, ObamaCareLess is scheduled for "double-digit" increase, which means Obama must twist the fact to brag on YoY increases as being the best in several years. He just forgot to mention the implementation jump of 500% before you use the lousy insurance.
----
Of course it could be worse and it will, but hey that FORCED consumer spending adds to GDP, which should be illegal and taken to court given that the Supreme Court ruled this as a tax; so why would healthcare premiums be part of GDP calculation? Because "Everything is Awesome"!!
Title says Spending, labels at bottom say Income. WTF?
the three colored lines represent 3 different income brackets. Magnitude of spending is measured on left axis, time measured on bottom axis.
Just went to Staples to take advantage of their sales ad for free copy paper. Got there to find the place completely shut down. I was just there a few days ago. WTF, no notice nothing; just a sign on the window "Store closed. Sorry for the inconvenience". Now there are three closed former retail stores all adjacent to one another. This is no a small town either. A million plus city and surrounding area.
Interesting, ALL the usual Libertarian BS comments about all the lazy bums on welfare are somehow not being posted in this thread. Fascinating...
OMG! The "biggest drop of all time"?????
Oh.. you mean since the survey was first created 18 months ago. Gotcha.
Has anyone else noticed the subtle shift in the fucking pom pom boys on CNBC and Bloomberg.
They seem more depressed when markets have a down day, they get flustered more easily, they don't shout down naysayers of the awesome meme so loudly, they try to change the subject just that bit quicker.
maybe they are starting to realize amongst the smartest ones, those with an IQ above my toddlers shoe size, that finally people just look at them for what are.
Talking assholes and they don't want to get covered in their foul breath.
Maybe they might even harbor hopes that if they changed their tunes and stopped spouting and spraying shit everywhere people might actually listen to them again.
Got news for you faggot pom pom boys. Its never gonna happen
What happened to Household Wealth?
I'm skipping a new flatscreen TV this year in favor of 500+ cans of sardines.
Call it food insurace.
Not enough spending...I think our elected officials can figure this one out...did I hear...print more money..
Even the Economist magazine, did a piece confirming "HARD WORK GETS YOU NOWHERE!" But somehow spun it Krugman style, claiming wages were historically too high and the adjustment is being made now. It showed a chart, charting work productivity and wages rising commensurately, then a divergence around 1973, where work productivity kept on going up on a tangent of 45 degrees, but wages simply flat-lined. Here's the chart........ http://www.upworthy.com/chart-how-has-the-rise-in-worker-productivity-af...
Reganomics, Thatcherism and Chicago Boys economics is a fraud. We have unprecedented levels of Q.E and how real in practice is the Trickle-Down theory? It's as real as the Bogey-man, Sasquatch and his fight with the Six-Million Dollar https://www.youtube.com/watch?v=6SZMn_711s4 It is now consigned to the dustbin of history, laying next to alchemy and talking to God. All the Republicans and Democrats have left is divide and rule tactics, coupled with never ending Dogma, rhetoric and clichés, deluding the plebs into believing if you vote for them, better times are just around the corner.
It's quite obvious to some, but not hit home to 95% of Zero Hedge posters. If the 2008 crash to the year 2015 has taught us anything, it is that our economic models are wrong and need major rethinking and the biggest lesson learned of 101 so far is, a privately owned central bank independent in monetary policy, free from external audit and left to its own devices to the creation of new money, is a fucking NO, NO!