The US Consumer Taps Out: BofA Internal Credit Card Data Shows Retail Spending Tumbles

Tyler Durden's picture

Ahead of this week's big macro event, Thursday's retail sales report, Bank of America has, as is customary, released its own internal credit and debit card data. It's downright ugly.

As BofA's new chief economist Michelle Meyer writes, "as we know from the choppiness of the monthly data, we are due for a partial payback in 3Q. We already saw a weakening in July retail sales based on both the BAC aggregated card data and Census Bureau figures. Based on the BAC aggregated card data, retail sales ex-autos fell 0.1% mom SA in August, a payback from 2Q strength."

The details, as per BofA, reveal that "the BAC aggregated card data showed that retail sales ex-autos declined 0.1% mom SA in August. This follows the 0.3% mom decline in July and pushes the 3-month average down to -0.2% mom." The number would have been even worse if BofA had not decided to adjust out data from the recently bankrupt Sports Authority. As BofA writes, "there is a special factor to account for — we adjusted our data to control for the bankruptcy of Sports Authority, which officially shut stores this month. We expect the Census Bureau will do the same." In other words, if one did not "adjust" the data for this factor, it would have been an outright disaster.

Broken down by various component categories, BofA finds that within the components of the back-to-school composite, spending on teen retail and young adult clothing has performed poorly. Here BofA has seen "fairly consistent contraction in this category since 2012.This fits into the “apparel malaise” theme that BofA Merrill Lynch’s consumer equity analysts have noted. It also likely reflects the shift in consumer budgets towards greater spending on experiences, which is evident in relatively stronger spend at hobby stores, travel and restaurants." It also means less spending on, well, non-experiences, which includes most goods and services.

 

The weakness continued at department stores, where sales based on the BAC aggregated card data fell 1.1% mom SA in August and are now down 4.6% yoy. The weakness in department stores is not a new phenomenon. Based on the BAC data, the share of sales to department stores declined from 2.5% in the beginning of the sample in 2005 to 2.0% today. The Census Bureau shows an even steeper decline.

Then, there is auto parts and vehicle unit sales, both of which also have shown continued weakness. BofA isolated a time series for autoparts that includes aftermarket parts but not original equipment parts. Autoparts trend well with vehicle unit sales, showing that the same macro factors are generally influencing demand for new autos and replacement parts. Both series have softened recently on a YoY basis.

Summarizing all the underlying components in tabular format, the data shows that the US consumer has now fully tapped out, and unless the Dept of Commerce comes out with some ridiculous seasonal adjustment, this Thursday's number will be bad enough to kill not only a December rate hike, but potentially all rate hike in this "none and done" cycle.

Finally, if that isn't enough, here are six more charts showing the trend of US retail sales. All else equal, the Fed should be cutting rates aggressively at this point.

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Seasmoke's picture

There is nothing else anyone could possibly want and/or need after 20 years of over consuming !!!

Delving Eye's picture

Why the hell isn't the LIBOR rate dropping too? It's nearly doubled from one year ago -- talk about bankruptcies and foreclosures. Shit hasn't even begun to hit the fan, folks. We're talking global meltdown.

Never One Roach's picture

Two retail peeples on my block said their sales are way down, I mean 60-82% down not only month over month but yoy also. They said they're just about ready give stuff away to move inventory. Bad credit is soaring also both mentioned so many customers are now scraping their purse/pockets for a few dollars. There's no middle class anymore both opined.

I told both "it's all part of Obamanomics" and almost got thrown out their houses since both voted for Nobama [and realize that was a yuuuuuuuuuuuuuge mistake].

LawsofPhysics's picture

You sir are a true optimist.

real bankruptcies would mean price reductions and clearing BAD debt. Maybe even sending some bad actors to PRISON.

Sorry, the fucking criminals have been in charge for quite some time, no way any of that happens.

WWIII will be the "solution".

BorisTheBlade's picture

Malarkey! Blasphemy! Chinese will be good sports and pick up the baton of meaningless consumption from weakening American consumers!

Hitlery_4_Dictator's picture

I don't know it looks bullish to me.

yellowsub's picture

That's why they're going to wipe out student loans, gotta get them into houses to buy shit they don't need.

LawsofPhysics's picture

Expected.

 

Now why not give every small business owner with good credit access to billions at ZERO pecent interest, just like the FUCKING BANKERS/FINANCIERS!!!!!!!!!!

 

I mean, "at this point, what difference does it make"?

 

Forward Soviet!!!!

tarsubil's picture

If you did that, you'd transfer money from the very wealthy to the middle class (instead of the other way around). Insane!

curbjob's picture

why not give every small business owner with good credit access to billions at ZERO pecent interest, just like the FUCKING BANKERS/FINANCIERS!!!!!!!!!!"

 Yeah, why not indeed. They could then buy their own stock off the shelves, report bumper sales, and take a healthy dividend. 

What could go wrong ?

LawsofPhysics's picture

of course, but at least then the "wealth" would be spread around.

I mean at this point global Weimar is FUCKING INEVITABLE!!!

Never One Roach's picture

Actually, banks in my area are charging moar interest for small business laons. They see bad times ahead, very bad, evidently.

espirit's picture

Stick a fork in it.

tarsubil's picture

These numbers don't look that bad. Nothing a couple million 0% for 21 month credit cards, QE4, a rate cut, and some lines of coke can't handle.

Father ¢hristmas's picture

Consumers can use the cards to split rails right on the counter as they charge fitness equipment they will never use to their accounts.

Taffy Lewis's picture

Back in the old days, the consumer spending wall would be attributed to not having any leftover spending cash after the monthly bills are paid.

This spending is different: the consumer has hit their credit limits on their plastic and - except for taking payday loans, robbing a bank, holding up another person - can't even possibly go into more debt.

 

Father ¢hristmas's picture

Rofl.  Soon, they'll find themselves adjusting figures even moar as moar and moar companies go bankrupt.

The American consumer is spending all his munney on housing, health care, and dope to ease his pain from spending too much fucking munney on housing and health care.

Tents are a good way to get back in touch with nature, and many fine books have been written in prison.*chuckle*

Never One Roach's picture

"It's contained...."

~ Soweto Obama

 

135 oil companies are on edge of bankruptcy.

http://fuelfix.com/blog/2016/09/12/135-oil-companies-are-on-the-edge-of-...

SimplePrinciple's picture

Yes, of course they will adjust the figures moar and moar.  As more businesses die, that leaves moar room for new startups.  I'm sure a revision or two to the birth/death model can take that right in stride.

Allen_H's picture

Don't buy anything fancy, only what you need to survive, do not support the globalist cockroaches.

Bemused Observer's picture

"they should be cutting rates now..."

And they COULD have, if they'd raised them when they should have.

No way out.

Atomizer's picture

German bail-in law will provide greater protection to depositors, derivative counterparties, holders of structured notes and money market instruments by legally subordinating plain vanilla senior unsecured debt —As a result, senior unsecured ratings and CDS prices are no longer a good reflection of the credit worthiness of a bank —Moody‘sand DBRS have introduced separate deposit / counterparty ratings. Fitch is set to follow in 4Q16

Deutsche Bank – Credit Overview

 

I have been warning you. 

LawsofPhysics's picture

LOL! The fact that these paper-pushing fuckers and there political puppets can get away with this ongoing brazen theft/fraud at the expense of everyone else is amazing...

Consuelo's picture

 

 

"All else equal, the Fed should be cutting rates aggressively at this point."

 

 

Stew meat is pretty lean already - better grab that tub of $$$4-Trillion dollar Crisco real soon...

Atomizer's picture

Let's go back to a old video session. Shall we?

Money Confiscation Legal? - YouTube

Iconoclast421's picture

Oooh down 4%. That means the Fed will increase its balance sheet by 4% (by buying stocks) to counteract this unfortunate turn of events. All they need is a certain lame duck congress to pass a simple bill making it legal for the Fed to buy stocks. Hell, they probably wont even bother with that small detail.

aliens is here's picture

Come on the economy is great. BOA must have not getting the memo from BHO.

snaphooker's picture

We have come from "Hope & change" to spare change.

 

Manipulism's picture

Should it not write citizen instead of "consumer"?

 

BigCumulusClouds's picture

Its just that everyone is switching to Amazon credit cards.

foodstampbarry's picture

I paid $5.60 for t-shirts at kohls the other day. Nice t-shirts, Urban Pipeline 50% cotton 50% polyester. I feel like I stole them. How the hell do they keep the doors open?

Atomizer's picture

TPP Tready. Subsidizing corporation as if it's a card table, shoebox, and a shell pea game for $20.00. 

Infield_Fly's picture
Infield_Fly (not verified) Sep 13, 2016 1:02 PM

Call that asshole on the golf course - he'll fix it.

Kickaha's picture

I think it is a common, widespread misconception around ZH that some sort of overnight crash will herald the end of the world as we know it.

Instead, I think a slow, gradual descent is more probable, expecially with central banks doing all they can to continuously push any crash into the watch of the next political administration.

Imagine a chart that pursuant to a rational formula melds consumer income and balance sheet wealth into one joint piece of data.  I suspect that data would align in something akin to a skewed bell curve, rising slowly on the left, humping in the middle, then falling sharply on the right as the limits of salary income are charted.

Data like this B of A crap just hints at where we are on that bell curve.  Many families on the left side of the curve are already living in tents, feeding themselves with SNAP cards, and getting medical care via Medicaid.  Each day, more families not so far to the left have the wave of bankruptcy pass over them and fall into ruin. These folks no longer use credit or debit cards, and there are more of them every day. 

Meanwhile everybody on the right side of the hump thinks things are just as awesme as they always have been, and you cannot convince them otherwise.  These are primarily the ones with financial, goverment, military-industrial complex, or medical industry jobs, where the revenue to pay them comes from taxes or insurance premiums (many of which are subsidized by tax revenue) or boosts from FRB accomodative policies.  These folks are also all in favor of keeping the status quo in place politically. 

As time passes, the bell curve to the left of the hump is shifting continuously downward, primarily due to good full time jobs with benefits disappearing to be replaced with crummy, no-benefits part-time work, while the line to the right of the hump is moving upwards do to those families participating in the asset bubbles blown by central bank policy therefor enjoying growth in their family balance sheets even if their incomes have been somewhat stagnant in recent years.  

As time passes, on every given day, more and more families to the left of the hump fall of a financial cliff, but overall, the losses are incremental in nature.

I suppose there might be some critical mass sort of circumstance that would precipate an overall destruction of this financial house of cards, but there are still a lot of financial tricks that can be utilized by the central banks around the world to keep the decline going at the current gradual rate for many years to come.

 

just the tip's picture

As BofA's new chief economist Michelle Meyer writes, "as we know from the choppiness of the monthly data,

seriously?  the chief economist of a major bank refers to the monthly data curve as "choppiness".  GMAFB  where the fuck is the wall street lingo?  how 'bout some professional word play?  double entendre?  fuck.  i'm a newbie at ZH and i would at least try something like "upydownyness"  or at least some reference to a roller coaster.

also, there is no mention if this activity is from actual cards or does it include the imaginary cards that are made up by the employees of the bank.  fuck.  they all do it.

 

KuriousKat's picture

its like putting a coke bottle in a freezer with cap on  to keep it cold ..when you come back surprise. No bottle and no coke..

 

dogbert8's picture

If consumers (aka "voters") really want to get the attention of the "elites" who are running this country into the ground, all they have to do is stop spending money -- just stop. Spend only on the absolute essentials and buy nothing else. That will get their attention quicker than anything else could do.

JailBanksters's picture

Have people finally caught on the Credit Card / Cashless scam ?