1. Both consumer confidence and sentiment have fallen unexpectedly.
2. After-tax personal incomes adjusted for inflation have flattened.
3. Sales of both new and existing homes took a surprising stumble.
4. Orders for most durable goods are down.
5. Manufacturing has slowed.
6. Jobless claims are up.
7. Fourth-quarter GDP growth came largely from a slower pace of inventory liquidation, not from an increase in consumer spending.
8. And, as a matter of fact, consumer spending weakened last quarter. |
Kellner also points out that consumer confidence has dropped to a nearly 30-year low, new home sales hit record lows, existing home sales are at a seven-month low, and even unemployment claims rose six of the past eight weeks. Read more at dailyreckoning.com |
It will be blockbuster, too, I fear. Figures on Tuesday showed that consumer confidence in the US fell to the lowest level in 10 months on fears about a slow labour market recovery. |
The weaker than expected report likely reflects the grim political climate and volatility in the financial markets, argues Ted Wieseman, an economist at Morgan Stanley. More worrying, Mr Wieseman said, is that the weak jobs outlook could bode poorly for next week’s employment report. |
US house prices meanwhile continued to bump along in December, notching a small monthly fall while recording slowing annual declines, while consumer confidence fell sharply on fears about the labour market. |
Home prices in the 20 largest US cities fell by 0.2 per cent between November and were off by 3.1 per cent from the same month a year ago, according to the closely -watched Case-Shiller home price index. The annual price decline has eased each month this year. Read more at www.ft.com |
| the consumer discretionary sector |
| is posting earnings 348% higher than a year ago and 30% above what analysts had predicted. |
| In 2009, the S&P Consumer Discretionary index advanced 38.8%, rebounding from a 34.7% drop in 2008. This year, O’Rourke says, investors are looking not just for profit growth, but for sales expansion. |
While all consumers still feel some economic pinch, wealthy and upper-middle-class consumers are growing more confident, says Lisa Walters, principal at research and consulting firm Retail Eye Partners in New York. Lower-income consumers—many living “paycheck-to-paycheck,” Walters says—continue to favor value retailers such as Wal-Mart Stores (WMT) and Target (TGT). Read more at www.businessweek.com |
Economists are anxious to see if consumers, who have been feeling less optimistic in spite of the rebound in economic activity, will be able to sustain spending “organically” without federal support. |
Separately, on Friday, the Reuters/University of Michigan consumer survey revealed that confidence slipped in October due to persistent fears that unemployment is unlikely to subside in the near future. The index fell from 73.5 in September to 70.6 this month but was revised up from its preliminary reading earlier this month. |
“While off the lows that were recorded when panic and paralysis were the order of the day, this measure of consumer sentiment nonetheless remains severely depressed,” said Joshua Shapiro, chief US economist at MFR. Read more at www.ft.com |
“Consumers” are the last to know what is going on. Signs of economic resurgence around the world have lifted UK consumer confidence to its highest level since we went into recession.
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The mood of confidence was supported by evidence that America’s recession is finally over.
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According to the Institute of International Finance, an
association of global banks, the current world rebound could easily
start losing momentum next year. |
A European Commission index of optimism produced by GfK NOP leaped to its highest level since January 2008.
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Eurozone economic confidence rose for the seventh consecutive month, beating market expectations and rising to its highest level in more than a year. |
The European Commission’s “economic sentiment” indicator jumped from 82.8 in September to 86.2 this month, an unexpectedly large increase after sluggish growth last month. |
The indicator remains below long-term averages but has now surged by 22 points since its March trough, the largest half-year rise since the series began in 1985. |
Most eurozone states contributed to the improvement, notably Italy (up 3.8 per cent), Germany (3.4 per cent) and France (3 per cent). Separately, the UK rose 3.2 per cent. |
The bulk of the improvement came from bullish sentiment in industry, with production expectations much higher than in previous months. Factory utilisation rates, which had declined for six consecutive quarters, were slightly higher. Read more at www.ft.com |
Here comes Financial Crisis 2.0. Even as new figures show house prices have risen for three consecutive months, concerns are growing that the real estate market will be severely tested this winter. |
| Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. |
The only hot sector of the real estate market has been foreclosures. Investors and first-time buyers have been competing for these, often creating bidding wars. But with the economy still weak, many analysts expect more foreclosures. |
Another factor likely to weigh on home sales in the coming months is a rise in interest rates. As the Federal Reserve ceases its buying of mortgage-backed securities, rates may well drift up to 6 percent, from 5 percent. |
In California, there is strong evidence that foreclosures are beginning to migrate from the subprime inland areas to the more exclusive coastal region. Read more at www.nytimes.com |
Waitrose wins back customers as grocery sector sees less sign of ‘recession panic’ |
Waitrose sales are up by 11%, suggesting grocery shoppers are tiring of ‘recession panic’. Photograph: Anthony Devlin/PA |
Recession panic is “ebbing away” and shoppers are returning to their old spending patterns, according to market research. |
A year ago, shoppers were defecting to Lidl and Aldi, forcing rivals such as Asda and Tesco to move to more aggressive pricing. Analysts expected Waitrose to suffer as customers reined in their spending. But a TNS Worldpanel market update, regarded as gold standard research within the food retailing industry, says there are signs of a return to normality. Read more at www.guardian.co.uk |
“Stiglitz says banking problems are now bigger than pre-Lehman,” says the Bloomberg report. |
Yes, Wall Street has a good gig going. The whole industry now benefits from the hedge fund formula – ‘heads I win, tails somebody else loses.’ When the hedge funds play the game, it’s their clients who lose money. But the way Wall Street banks play it, the big loser is the US government directly, and US taxpayers and bondholders indirectly. |
| An analyst at JPMorgan estimates that American and European banks will pay their
141,000 investment banking employees $77 billion in 2011…or about $543,000 per
employee. |
| We have begun the process of reversing a half-century of credit
expansion. Since 1945, debt per person has increased. Now it is
decreasing – with vast consequences. |
Fear will make a comeback…when people realize where they’re headed… |
| one thing that is up: government deficits |
| Oil prices fell below $66 a barrel Monday as investors worried that crude demand will recover only slowly in the U.S. and brushed off upbeat economic growth data from Japan. |
Friday’s big selloff was triggered by a sharp drop in the Reuters/University of Michigan consumer sentiment index, a bad sign for crude demand, which has already been sluggish this summer. |
Oil also followed stock markets, which fell heavily in both Asia and Europe. |
Japan’s Nikkei 225 stock average dropped 3.1 percent, while Germany’s DAX was down 1.8 percent. |
“We’ve got overwhelmingly weak fundamentals in oil,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “The market has really been due for a correction.” Read more at finance.yahoo.com |
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7 Critical Data Points Show the US Economy is Hitting a Wall
