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RETAIL - May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis

May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis, Gallup Survey Finds 06-01-15 ZH

It may not have the clout of the official monthly Dept of Commerce Retail Sales report not due out for two more weeks, but in retrospect considering how many credibility issues with seasonal adjustments government data has had in recent months, the Gallup Consumer Spending report may have become far more realistic than official government data.

In which case all hope of a Q2 GDP rebound abandon, ye who read this: after a strong April, in which the average consumer reported a daily spend of $91, $3 higher than a year prior, and the highest spending month since before the great financial crisis...

... in May things quickly deteriorated, with average daily spending in April and May unchanged at $91, despite a consistent jump the just concluded month of May in recent years, and despite the substantial jump in gas prices, which in May 2008 led to a $28 jump in average spending, and $10 in 2014.

Worse, on an apples to apples, year-over-year basis, average spending in May of 2015 was $7 less than 2014, and nearly identical to 2013, when the US unemployment rate was nearly 3% higher, and the economy was supposedly sputtering badly enough for the Fed to launch QE3.

Finally, as the chart below shows, this was the biggest month of May consumer spending drop in nominal dollar terms since the 2008 financial crisis.

This is what Gallup does to calculate average spending:

Gallup's daily spending measure asks Americans to estimate
the total amount they spent "yesterday" in restaurants, gas stations,
stores or online -- not counting home, vehicle or other major purchases,
or normal monthly bills -- to provide an indication of Americans'
discretionary spending. The May 2015 average is based on Gallup Daily
tracking interviews with more than 15,000 U.S. adults.

What it found is that last May's spending level has largely gone unmatched since, except in
December 2014, when spending also averaged $98. However, Americans
typically spend more in December because of holiday shopping. Still, the
latest monthly figure is higher than what Americans spent each May from
2009 through 2013. By contrast, Americans spent an average of $114 in
May 2008 -- prior to the global financial meltdown later that year that
both deepened and prolonged the U.S. recession that started in late
2007.

But the punchline is that while the long awaited, and now long forgotten "gas savings" from the drop in crude, which in california is rapidly approaching an unchanged Y/Y print, never materialized in a jump in actual spending as today's latest disappointing consumer spending data confirms, now that gas prices are rising consumer are retrenching even more!

Quote Gallup:

The stagnation in Americans' spending may be related to gas prices, which continued to rise last month -- though they are expected to plateau and eventually dip as the year progresses. Confidence in the economy also dipped, with lower weekly measures in May than in April. Gallup has found that Americans' perceptions of the economy are related to gas prices, and what they pay at the pump certainly influences how much they spend overall and how much they have left for discretionary purchases after they take care of the basics. If gas prices do stabilize, this may enable Americans to spend more on other things.

While Gallup's historical spending averages have generally been higher in the spring and summer months than in the winter, spending usually dips or stays flat in June compared with May. With consumer spending the major driver of U.S. economic growth, healthier spending in June could help keep the economy on a strong track toward recovery after a disappointing first quarter that saw the economy shrink.

Or, should May's weaker than expected trend persist into June, then one can forget all about a second quarter GDP rebound. In fact, while Q1 GDP was saved to the tune of 2% from a surge of inventory accumulation, in Q2 this won't repeat, and in the meantime, personal spending is starting off quite poorly and on the wrong foot. Should there be a comparable Y/Y decline in spending in June as well, it is virtually assured that Q2 GDP will also be negative.

Which would mean that the US has officially entered recession just as the Fed is timing its first rate hike in one trading generation.

06-06-15

SII

US IND

CONS

 

RETAIL - Factory Orders Contract

 

06-06-15

SII

US IND

CONS

 
MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - May 31st, 2015 - June 6th, 2015      
BOND BUBBLE     1
RISK REVERSAL - WOULD BE MARKED BY: Slowing Momentum, Weakening Earnings, Falling Estimates     2
GEO-POLITICAL EVENT     3
CHINA BUBBLE     4
JAPAN - DEBT DEFLATION     5
06-02-15 JAPAN  

EU BANKING CRISIS

   

6

TO TOP
MACRO News Items of Importance - This Week

GLOBAL MACRO REPORTS & ANALYSIS

     

US ECONOMIC REPORTS & ANALYSIS

     
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES      
     
Market Analytics
TECHNICALS & MARKET ANALYTICS

 

   
STUDIES - The Expected Shift from Debt for Equity Swaps      
06-03-15 STUDIES
ANALYTICS
COMMODITY CORNER - AGRI-COMPLEX   PORTFOLIO  
SECURITY-SURVEILANCE COMPLEX   PORTFOLIO  
     
THESIS - Mondays Posts on Financial Repression & Posts on Thursday as Key Updates Occur
2015 - FIDUCIARY FAILURE 2015 THESIS 2015
2014 - GLOBALIZATION TRAP 2014

2013 - STATISM

2013-1H

2013-2H

2012 - FINANCIAL REPRESSION

2012

2013

2014

06-01-15 THEMES

 

FINANCIAL REPRESSION

 

2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS

2011

2012

2013

2014

2010 - EXTEND & PRETEND

   
THEMES - Normally a Thursday Themes Post & a Friday Flows Post
I - POLITICAL
     
CENTRAL PLANNING - SHIFTING ECONOMIC POWER - STATISM   THEME  

- - CORRUPTION & MALFEASANCE - MORAL DECAY - DESPERATION, SHORTAGES.

  THEME

- - CORRUPTION & MALFEASANCE - MORAL DECAY - > DESPERATION, SHORTAGES.

Systemic Corruption Has Destroyed America 06-03-15 George Washington via ZH

It's been less than a month since we posted on this topic. But sadly, there are already many new entries.

The Cop Is On the Take

Government corruption has become rampant:

  • Senior SEC employees spent up to 8 hours a day surfing porn sites instead of cracking down on financial crimes
  • NSA spies pass around homemade sexual videos and pictures they’ve collected from spying on the American people
  • Investigators from the Treasury’s Office of the Inspector General found that some of the regulator’s employees surfed erotic websites, hired prostitutes and accepted gifts from bank executives … instead of actually working to help the economy
  • The Minerals Management Service – the regulator charged with overseeing BP and other oil companies to ensure that oil spills don’t occur – was riddled with “a culture of substance abuse and promiscuity”, which included “sex with industry contacts
  • Agents for the Drug Enforcement Agency had dozens of sex parties with prostitutes hired by the drug cartels they were supposed to stop (they also received money, gifts and weapons from drug cartel members)
  • The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted
  • The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud (a whistleblower also “gift-wrapped and delivered” the Madoff scandal to the SEC, but they refused to take action). Indeed, Alan Greenspan took the position that fraud could never happen
  • Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not. The Treasury Secretary also falsely told Congress that the bailouts would be used to dispose of toxic assets … but then used the money for something else entirely
  • Congress has exempted itself from the healthcare rules it insists everyone else follow
  • Law enforcement also grabs massive amounts of people’s cash, cars and property … even when people aren’t CHARGED with – let alone convicted of – any crime
  • Private prisons are huge profit-making centers for giant companies, and private prison corporations obtain quotas from the government, where the government guarantees a certain number of prisoners at any given time
  • The government covered up the health risks to New Orleans residents associated with polluted water from hurricane Katrina, and FEMA covered up the cancer risk from the toxic trailers which it provided to refugees of the hurricane.  The Centers for Disease Control – the lead agency tasked with addressing disease in America – covered up lead poisoning in children in the Washington, D.C. area (the Centers for Disease Control has also been outed as receiving industry funding)
  • In response to new studies showing the substantial dangers of genetically modified foods, the government passed legislation more or less PUSHING IT onto our plates
  • The Bush White House worked hard to smear CIA officers, bloggers and anyone else who criticized the Iraq war
  • The FBI smeared top scientists who pointed out the numerous holes in its anthrax case. Indeed, the head of the FBI’s investigation agrees that corruption was rampant
  • The government has intentionally whipped up hysteria about terrorism for cynical political purposes.  For example, former Secretary of Homeland Security Tom Ridge admitted that he was pressured to raise terror alerts to help the president win reelection
  • When the American government got caught assassinating innocent civilians, it changed its definition of “enemy combatants” to include all young men – between the ages of say 15 and 35 – who happen to be in battle zones. When it got busted killing kids with drones, it changed the definition again to include kids as “enemy combatants”
  • The government treats journalists who report on government corruption as CRIMINALS OR TERRORISTS.  And it goes to great lengths to smear them. For example, when USA Today reporters busted the Pentagon for illegally targeting Americans with propaganda, the Pentagon launched a SMEAR CAMPAIGN against the reporters

The biggest companies own the D.C. politicians. Indeed, the head of the economics department at George Mason University has pointed out that it is unfair to call politicians “prostitutes”. They are in fact pimps … selling out the American people for a price.

Government regulators have become so corrupted and “captured” by those they regulate that Americans know that the cop is on the take. Institutional corruption is killing people’s trust in our government and our institutions.

Neither the Democratic or Republican parties represent the interests of the American people.  Elections have become nothing but scripted beauty contests, with both parties ignoring the desires of their own bases.

Indeed, America is no longer a democracy or republic … it’s officially an oligarchy. And the allowance of unlimited campaign spending allows the oligarchs to purchase politicians more directly than ever.

No wonder polls show that the American people say that the system is thoroughly corrupt.

Moreover, there are two systems of justice in Americaone for the big banks and other fatcats … and one for everyone else. Indeed, Americans have .

Big Corporations Are Also Thoroughly Corrupt

But the private sector is no better … for example, the big banks have literally turned into criminal syndicates engaged in systemic fraud.

Wall Street and giant corporations are literally manipulating every single market.

And the big corporations are cutting corners to make an extra penny … wreaking havoc with their carelessness. For example:

  • U.S. military contractors have pocketed huge sums of money earmarked for humanitarian and reconstruction aid. And see this (whistleblowers alerted the government about the looting of Iraq reconstruction funds, but nothing was done)
  • There is systemic corruption among drug companies, scientific journals, university medical departments, and medical groups which set the criteria for diagnosis and treatment

(Further examples here, here, here, here and here.)

We’ve Forgotten the Lessons of History

The real problem is that we need to learn a little history:

  • We’ve known for thousands of years that – when criminals are not punished – crime spreads
  • We’ve known for centuries that powerful people – unless held to account – will get together and steal from everyone else

Beyond Partisan Politics

Liberals and conservatives tend to blame our country’s problems on different factors … but they are all connected.

The real problem is the malignant, symbiotic relationship between big corporations and big government.

06-04-15 THEME
- - SECURITY-SURVEILLANCE COMPLEX - STATISM M THEME  
- - CATALYSTS - FEAR (POLITICALLY) & GREED (FINANCIALLY) G THEME  
II-ECONOMIC
     
GLOBAL RISK      
- GLOBAL FINANCIAL IMBALANCE - FRAGILITY, COMPLEXITY & INSTABILITY G THEME  
- - SOCIAL UNREST - INEQUALITY & A BROKEN SOCIAL CONTRACT US THEME  
- - ECHO BOOM - PERIPHERAL PROBLEM M THEME  
- -GLOBAL GROWTH & JOBS CRISIS      
- - - PRODUCTIVITY PARADOX - NATURE OF WORK   THEME

MACRO ANALYTICS w/ CHS

- - - STANDARD OF LIVING - EMPLOYMENT CRISIS, SUB-PRIME ECONOMY US THEME
MACRO ANALYTICS w/ CHS
III-FINANCIAL
     
FLOWS -FRIDAY FLOWS

MATA

RISK ON-OFF

THEME
06-05-15 THEMES

FLOWS

CRACKUP BOOM - ASSET BUBBLE   THEME  
SHADOW BANKING - LIQUIDITY / CREDIT ENGINE M THEME  
GENERAL INTEREST

 

   
STRATEGIC INVESTMENT INSIGHTS - Weekend Coverage

 

RETAIL - CRE

 

 

  SII

 

US DOLLAR

 

 

  SII

 

YEN WEAKNESS

 

 

  SII

 

OIL WEAKNESS

 

 

  SII
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