3 Charts On The US Consumption Crash Dead-Ahead

Tyler Durden's picture




 

Average US gas prices are over 13% higher since late December 2011, back at June 2011 levels, and do not look set to drop any time soon. The anecdotal impact of this rise in a significant segment of the real US consumer's spending habits is unmistakable, as we discussed earlier, but it is more important to note where we have come from when considering the macro impact. Q4 macro data was 'juiced' by the significant drop in the price of energy as the 4-5pt drop in Energy-and-Utilities spend enabled 'visible' consumption to rise during that time (obviously helped by government handouts also). Just as occurred in the latter part of 2008, as the consumer was forced to spend more on Energy, so the visible consumption dropped notably and given the significance of the current data 'drop' in energy spending, when the current gas prices filter into this data, we would expect, as Credit Suisse points out, consumption on more discretionary spending will drop significantly.

Gas prices are up very significantly (both absolutely and on average)...

 

but the 'forced' rise in Energy spending has not filtered into the data yet...

 

 

...and just as in late 2008, as the spend of Energy and Utilities rises, so discretionary spending will drop significantly and given the huge divergence in the last quarter or two, the reaction could be very significant.

 

 

Perhaps this is just the 'crash' that Bernanke needs to run-the-presses again as conditionality will increasingly force investors to reject the 'optimal' buy-and-keep-buying trend as they recognize that QE3 can't start until things get worse, and buying in anticipation of QE3 means it will never happen?

Charts: Bloomberg

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Mon, 03/05/2012 - 15:44 | 2224995 Mr Lennon Hendrix
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It's all priced in.

Mon, 03/05/2012 - 15:49 | 2225013 nope-1004
nope-1004's picture

There's the public QE.  Then there's the private QE.  The FED has been stuffing banks and bailing out those close to the edge for years.  They just won't publicly ackwnowledge it and say it.  The banks are insolvent, everyone knows that.  Without money printing to jam gum in the cracks, the reset button would have been hit a long time ago.

 

Mon, 03/05/2012 - 15:49 | 2225022 redpill
redpill's picture

OT:  redpill tip of the day

Q: What if you could get the same .999 fine silver round that Ron Paul waved into Bernanke's face for a couple bucks over spot and not only get the bullion but the potential it could be a collector's item some day?  

A: Buy some

http://www.silverstampede.com/scripts/display_product.php?product_id=2 

Mon, 03/05/2012 - 16:16 | 2225218 aphlaque_duck
aphlaque_duck's picture

I thought he said it was an Eagle?!?? Legal tender for a buck...

Mon, 03/05/2012 - 16:20 | 2225266 JPM Hater001
JPM Hater001's picture

Market rally in full swing...about to go green.

Mon, 03/05/2012 - 15:51 | 2225037 stocktivity
stocktivity's picture

The CNBC cheerleaders are already harping that the dow is "well off it's lows". Same thing every day about this time.

Mon, 03/05/2012 - 16:10 | 2225169 JPM Hater001
JPM Hater001's picture

Time for the 3 o'clock rumor breakout.

13000 here we come again.  Ill get the materials ready...

Mon, 03/05/2012 - 16:25 | 2225302 resurger
resurger's picture

I JUST CAN NOT BELIEVE THIS!

 

Mon, 03/05/2012 - 16:56 | 2225509 The trend is yo...
The trend is your friend's picture

look at the volume today.  A new record low might be in the cards

Mon, 03/05/2012 - 16:13 | 2225186 azzhatter
azzhatter's picture

Bob Pissonme was quoting Wen Jiabao. Now there is a reliable source

Mon, 03/05/2012 - 16:30 | 2225350 the grateful un...
the grateful unemployed's picture

they also tell you when the dow is off it's highs, but you're right, they usually say the Dow IS UP, then when they look at the chart and it's down they change, but remember this as a matter of media/propaganda methods.

the first thing you say is always the most important part of the message. and retractions are always printed on the back page.

when you want to get the message out you say LOUDLY

PLEASE DRINK

and then your voice tails off and you say

responsibly

Mon, 03/05/2012 - 16:14 | 2225204 The trend is yo...
The trend is your friend's picture

and the russell is now up on the day.  Nothing gets past Skynet

Mon, 03/05/2012 - 20:41 | 2226283 GernB
GernB's picture

But it's so simple. All I have to do is divine from what I know of investors: are they incluned to buy on rumors of QE3? Now a clever investor would know that a rally would never lead to QE3. I am not a great fool so clearly I cannot buy on rumors of QE3. However, investors would know that other investors would not buy because it would ensure no QE3, so clearly I cannot choose to stand aside on rumors of QE3.

Mon, 03/05/2012 - 15:45 | 2224997 taniquetil
taniquetil's picture

An Apple a day makes your cash go away

Mon, 03/05/2012 - 15:47 | 2225011 SheepDog-One
SheepDog-One's picture

Nope, Bernanke is not going to 'run the presses again' Ive been trying to tell you that for a year Tyler, its over. The next one will leave all the pensioners and 401K brigades high and dry.

Mon, 03/05/2012 - 17:18 | 2225632 Silveramada
Silveramada's picture

maybe so! because he doesn't even need it! all he has to do is talk at a press conference and call his friends to naked short some year worth of silver production in 20 min(naked short obv.)

Mon, 03/05/2012 - 15:47 | 2225014 The trend is yo...
The trend is your friend's picture

Burn Already!

Mon, 03/05/2012 - 15:47 | 2225015 GeneMarchbanks
GeneMarchbanks's picture

As soon as some selling starts they'll circulate some rumors and the momos will jump back on to not miss out. In an election year everything is pure calculation and micro-management.

Mon, 03/05/2012 - 15:51 | 2225035 The trend is yo...
The trend is your friend's picture

Very true.  Their ability to make the markets defy gravity is uncanning. 

Mon, 03/05/2012 - 16:05 | 2225128 SheepDog-One
SheepDog-One's picture

Then when they want to pull the rug out, thats uncanning too. And no one but them ever knows when that is, likely very soon though.

Mon, 03/05/2012 - 15:48 | 2225018 Jason T
Jason T's picture

Aggregate demand is collasping either way... http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgfupus2&f=4

Mon, 03/05/2012 - 16:16 | 2225220 HAhyperion
HAhyperion's picture

Agree.  The FED Money Flood has eroded the dollar and consumer purchasing power.  The zero interest rate environment has discouraged savings and pushed more normally risk adverse to stocks/bonds.  Only those with good credit have refinanced and their consumption has long been satiated.  Only high end luxury market catering to the .01% seeing growth.

Did you catch that new long edition Cartier ad?

Mon, 03/05/2012 - 15:51 | 2225036 youngman
youngman's picture

But there are a lot more people on Food Stamps, and Disability payments now.......picking up the slack...but then we are a country of slackers....looks like Angry Birds is our real growth engine....not the "green" crap...funny our two best industries...Apple and Angry Birds are toys.....what a country

Mon, 03/05/2012 - 17:31 | 2225683 CrockettAlmanac.com
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.funny our two best industries...Apple and Angry Birds are toys.....what a country

 

Just like Brave New World.

Mon, 03/05/2012 - 15:58 | 2225074 Long-John-Silver
Long-John-Silver's picture

A friend of mine owns a motel and bar on the Red Neck Rivera (Panama City Beach, FL). He typically books up all his rooms for the entire year by this time. He told me he's only at 10% and may cancel them and close down this year. Everyone is doing Staycations.

Mon, 03/05/2012 - 16:24 | 2225219 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Wow.  That is interesting.  10%!

Get your used Starcraft camper while you still can.  See here:

http://chattanooga.craigslist.org/rvs/2873423475.html

Mon, 03/05/2012 - 20:32 | 2226260 lincolnsteffens
lincolnsteffens's picture

That's not too far from my business. I've been down 80% for two years. I'm buying a lot cheaper so when I do make a sale the profit margin is much higher. Problem is to go from $200k a quarter down to $40K a quarter only leaves enough to keep the lights on and the health insurance paid. I pay for the food out of my savings. I suppose I could technically retire and collect social security to help a bit.  Other merchants in my area are none too happy. If my silver and gold collapses with everything else not only am I fucked but the money I give to charities every year will be zippo.

Mon, 03/05/2012 - 16:02 | 2225105 ziggy59
ziggy59's picture

US Senate unanimously passes Chinese tariff bill...hmmm this might lower consumption more.

Mon, 03/05/2012 - 16:12 | 2225183 scatterbrains
scatterbrains's picture

Is this why AAPL dropped a baby turd today ?

Mon, 03/05/2012 - 16:28 | 2225330 RSloane
RSloane's picture

Did they really? I'm sure this is going to end well.

Mon, 03/05/2012 - 16:02 | 2225108 chancee
chancee's picture

Where o where would we be without the futures?

Mon, 03/05/2012 - 16:05 | 2225127 rubearish10
rubearish10's picture

We just keep trying to call anything a crash hoping it'll actually happen. Perhaps but not likely to "happen" this way. Have "Black Swans" ever been known to be broadly claimed? Disgusted, we have an Apple comeback.

Mon, 03/05/2012 - 16:14 | 2225209 JPM Hater001
JPM Hater001's picture

Data will cascade before the facad is lifted and the whole thing implodes under it's own weight.  So, no, I dont expect a collapse is immenent but I am willing to bet a beer we are close enough to Niagra to hear the flow.

Mon, 03/05/2012 - 16:42 | 2225422 rubearish10
rubearish10's picture

Since I would get a beer either I'd take that bet. My point was that there are many of us who want to get in front of what we saw in '08. This has been going on ever since. It's disturbing because of all the preparation. I keep having to swap out my canned foods and bottled water as they expire! Good thing Gold does not,,,expire.

Mon, 03/05/2012 - 16:42 | 2225423 rubearish10
rubearish10's picture

Since I would get a beer either I'd take that bet. My point was that there are many of us who want to get in front of what we saw in '08. This has been going on ever since. It's disturbing because of all the preparation. I keep having to swap out my canned foods and bottled water as they expire! Good thing Gold does not,,,expire.

Mon, 03/05/2012 - 16:10 | 2225167 Flakmeister
Flakmeister's picture

Getting squeezed between peak oil and failed neo-classical economic policy is so much fun, isn't it?

Mon, 03/05/2012 - 16:13 | 2225189 in-Credible Banker
in-Credible Banker's picture

This was not discovered by me----saw it in a comment on ZH over the weekend.  Anyone have even a remotely plausible explanation for the dramatic drop in gasoline deliveries apparent in the linked series??

 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

 

??????????

 

 

Mon, 03/05/2012 - 16:16 | 2225225 JPM Hater001
JPM Hater001's picture

Baltic dry is off ~50% YTD...I think that would effect deliveries.

Tyler- Can we see a chart over chart or is there a trucker equivalent?

Mon, 03/05/2012 - 16:53 | 2225485 earleflorida
earleflorida's picture

"Fossil Fuel Prices in the Arab World and the Fear of Reform" __ July-Oct 2010 *{[dated][note 2008]}

This,... is not good, for the Arabs, and just might [more unrest?] explain why the increase rather than decrease bpd?

http://www.sutp.org/documents/PRES-FPCH2010-AW-EN.pdf

Ps. 'caught between a rock and a hard place' - subsidizing the indigenous and reneging on price to compensate the primary is a dangerous path to undertake? Sharia Greed ^  

Mon, 03/05/2012 - 17:13 | 2225596 smiler03
smiler03's picture

@ in_Credible Banker

If you look at the original ZH post with that chart there are 3 pages of comments on it. Should keep you busy for a while.

http://www.zerohedge.com/news/guest-post-why-gasoline-consumption-tanking

Mon, 03/05/2012 - 16:17 | 2225227 non_anon
non_anon's picture

ah, life in Amerika, embrace it!

Mon, 03/05/2012 - 16:18 | 2225240 JPM Hater001
JPM Hater001's picture

Embrace it before it embraces you...

There-fixed.

Mon, 03/05/2012 - 16:19 | 2225250 Shizzmoney
Shizzmoney's picture

The US consumer is just starting to learn that the way out of their mess is to "Go Galt".

Mon, 03/05/2012 - 17:46 | 2225782 MachoMan
MachoMan's picture

It's really hilarious to me how "intelligent" people are with regards to making due when the word gets out that banks can't foreclose on them...  It's a freaking tidal wave of strategic defaulters...  as local food and energy movements pick up steam, it's going to be really, really interesting.

Mon, 03/05/2012 - 16:20 | 2225252 tgatliff
tgatliff's picture

Dont forget that last year had a 100% capital writeoff as well.  Eventhough no one is talking about it, I know that there was a huge spike in industrial orders that all had requirements on being invoiced before 12/31/11.   I am pretty sure that this had a much larger affect that many people realize, and would explain why we are seeing inventory restocking occuring in Q1.   Just like "cash for clunkers", effectively the only thing it should achieve is to steal from future purchases.

Mon, 03/05/2012 - 19:43 | 2226158 css1971
css1971's picture

I'm just waiting for this to start filtering through in Q2.

Mon, 03/05/2012 - 17:07 | 2225569 boiltherich
boiltherich's picture

Late summer 2008, the housing crash was just making it's consequences known and gas here hit $4.359, what followed was nothing less than a depression, at least in this region, and it has not gotten any better, just sort of stabilized at really really bad. 

Now gasoline is back to $4.059 and the full impact of the recent wholesale increases are not even priced in yet.  If wholesale RBOB stays at $3.28 per and rises no further then gas should stop increasing at about $4.289, for the moment, till summer gas blends hit the market then add another 60 cents at least.

I say that gas prices in 2008 were as much a factor in destroying the economy as real estate.  And even now housing is no better than it was in 2008, credit is as maxed out as then if not more so, and there are about the same number of full time employed to support more people on incomes that have dropped in the intervening years even as unreported inflation has made the cost of living some 20% higher.  Gas was the double whammy if you want to put it that way, or the nail in the coffin and the trigger for the depth of depression we hit, I see no reason why it will not be so again this year, and in fact could be a lot worse.

The AG lining in all this is that unless Barry O can wave a magic wand at the SPR so that it gusheth forth cheap gasoline by September his chances or reelection diminish rapidly. 

Mon, 03/05/2012 - 17:07 | 2225574 toadold
toadold's picture

Well durable good orders are at a new low for the last 12 month period.  I wonder how FedEx and UPS are doing?

You can bulk buy some food items cheaper through Amazon these days. 

Mon, 03/05/2012 - 17:41 | 2225750 CrockettAlmanac.com
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Suggestions? I priced 5 lb JIF peanut butter at Amazon as it has gotten so expensive but I can still it cheaper at the local supermarket.

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