dagblog - Comments for "Lack of confidence spurs spending."

See "Spengler's" argument in

artappraiser — Tue, 01 Nov 2011 06:43:10 +0000

See "Spengler's" argument in his Nov. 1 column for Asia Times:

http://atimes.com/atimes/Global_Economy/MK01Dj04.html

Unusual twist on this all, but very thought-provoking; he thinks the stage is set for GOP wins.

("It's the bankrupted state & local governments squeezing the few homeowners left, stupids"?)

Reminded me of the last Michael Lewis piece for Vanity Fair that Donal posted--if you didn't read that, I'd highly recommend it.

I think the best thing you

Oxy Mora — Mon, 31 Oct 2011 03:44:12 +0000

In reply to I'm not sure it's correct to

I think the best thing you can say about the GDP numbers is that it could have been a lot worse---and---it is now being conceded that a double dip "recession" is not in the offing. A couple of things like Europe, and another ratings down grade, could possibly put us into another "recession. But I agree with you that this level of "growth" is not going to move the needle much, if at all, on unemployment. I don't think I implied "scattered few". What I said was a large "swath".

"Consumption" is 70% of GDP, as currently defined. That these consumption numbers should be parsed, I agree. The way I understand it, "retail spending is 40% of the 70%". And therein most likely lies the worst implications of the overall numbers because my guess is that the "affluent" component of retail is the real driver.

IMO, there's no way to distil

kgb999 — Sat, 29 Oct 2011 07:17:38 +0000

In reply to Based on this: Residential

IMO, there's no way to distil this into a single-cause slogan ... there are so many messes that we've half-forgotten about a ton of them that are still lurking in the shadows. Maybe something like "It's the mess stupids."

I thought the contrast between the economist article and the original Calculated Risk article the graph came from was also kind of interesting. If I'm reading it right, they seemed to draw nearly opposite conclusions.

(Calculated Risk)

The key leading sector - residential investment - has lagged this recovery because of the huge overhang of existing inventory. Usually RI is a strong contributor to GDP growth and employment in the early stages of a recovery, but not this time - and this is a key reason why the recovery has been sluggish so far.

vs.

(Economist)

The country may have had too many housing units at one point during the boom, particularly in certain outlying areas in especially bubbly markets. Whatever national excess there was has vanished. Once growth triggers a rise in household formation, housing demand will soar, and if the government can't clear up the lending channel, rents will begin soaring too.

I'm still looking deeper at the Calculated Risk stuff ... but at first glance the contrast appears somewhat striking - and would seem to imply very different things for our short/mid-term housing-related markets.

I'm not sure it's correct to

kgb999 — Sat, 29 Oct 2011 05:53:35 +0000

In reply to Lack of confidence spurs spending.

I'm not sure it's correct to automatically equate GDP growth with increased consumption. At least not as increased consumption is traditionally viewed. Suppose households in the low/middle income ranges were just hit with an increase in unavoidable corporate fees that average $50 per month per household - wouldn't the entities that captured those fees be reporting in such a way that they contributed to the GDP yet not actually represent a voluntary expenditure on the part of the consumer nor represented an actual increase in quantity of goods they were able to acquire and consume? Or inflation for that matter.

If something like that occurred, couldn't it be a more plausible explanation for the disconnect between the majority's personal outlook contrasted against the increasing bottom lines of corporate earnings and the outlook of those who benefit simply because of the GDP number being higher irrespective of why, specifically, that number has seen an increase? There really are a TON of consumer traps kicking in over the last few months that have significantly increased the cost of living for folks who don't have an extra $1000 to keep their minimum balance up, don't have bank accounts at all, get public assistance (in the form of increased automatic per-transaction deductions on electronically disbursed benefits via debit card for example), etc., etc. All of this stuff should be showing up on bottom lines just about now.

Either way, my understanding is that even with this number, GDP growth barely matched population growth. Assuming the number isn't revised downward (as has been the trend), isn't that really just barely treading water anyhow? In other words, even of we grow at this so-called healthy clip forever - won't the current level of distress consumers are feeling continue indefinitely without seeing a much greater quarter-on-quarter improvement?

Seems as if one is on the upside of the current economic situation, this could possibly be construed as good news - as it could be seen as a case of "you may get to keep yours"; but for those already on the downside or a half-point adjustment away from the abyss, unless one takes an absurdly optimistic view that doesn't seem to have much basis in economic reality - these numbers simply mean the economy holds no future for anyone who doesn't already have one locked-in.

IMO you are terribly off base when you assume things are rosy for most and only tragic for a scattered few not yet caught up in what you see as a dizzle-done recovery. Things totally suck - for example, food costs anywhere between 20% and 80%+ more than it did this time last year. This means that the 25% of Idahoans on food assistance get that much less food on the table - while those with the money to spend end up with that much less discretionary income. Someone up the economic food chain put the difference in their pockets and now you are calling it growth. But we purchased this growth with a couple trillion in QE. It isn't real in any rational economic sense ... it's simply killing us.

We're going to end up with Romney. Who wants to vote for a total dipshit aside, any chance Obama had of recapturing the youth vote pretty much got assed-out by OWS ... a shiny new bike, and it ain't cool to like Obama anymore. Maybe if he wasn't such a total douche about Marijuana .... kids like pot.

What is missing is the saving

trkingmomoe — Sat, 29 Oct 2011 05:45:29 +0000

In reply to Lack of confidence spurs spending.

What is missing is the saving index in this report. I bet it dropped. The price of basic food items seen big increases. This will cut into saving and push up spending with low consumer confedence. I hit my spending ceiling a while ago. I think twice before I spend a dollar a pound for potatoes or make peanut butter cookies. So I buy less potatoes and substitute a box of instant mash potatoes, rice and/or noodles to my shopping cart. The person that still is saving will save less and still buy the same amount of potatoes. I check out spending the same but with more items and the other person spends more on their normal grocery cart. Over all the grocer is ordering more new line items in instant potatoes, noodles and rice with an increase in dollar sales because many shoppers are doing the same thing as me and the potato lover. It makes grocery sales look good even with the drop in the pounds of potatoes bought.

What is missing is the saving

trkingmomoe — Sat, 29 Oct 2011 05:45:13 +0000

In reply to Lack of confidence spurs spending.

Thanks, Flavius. Saki's

Oxy Mora — Sat, 29 Oct 2011 02:12:31 +0000

In reply to Yes I meant that neither

Thanks, Flavius. Saki's aunt--great story.

Yes I meant that neither

Flavius — Fri, 28 Oct 2011 23:35:19 +0000

In reply to Thanks-Flavius-its a pleasure

Yes I meant that neither current regulations nor confusion about the extent of future regulations is a significant factor in reducing investment.

If there's a market businesses will invest. If not , not.

I'm reminded of Saki's aunt.

Stingy and mean and when he and his (?)brother were sent to visit her there was never anything good to eat or fun to do.

But if they misbehaved they always got told at great length that she had intended to take them to a carnival but now that they have been so naughty she won't.

Interesting explanation of why this year's capex may be artificially hyped.

I didn't see it on Real Clear

Oxy Mora — Fri, 28 Oct 2011 19:46:50 +0000

In reply to Speaking of confidence, I too

I didn't see it on Real Clear Politics but yesterday there was an article somewhere that a poll was done for Dems in Congressional districts in which the states have completed redistricting. They found 10 districts where R's are polling less than D's as of the moment.

One thing that I didn't double check but seem to remember is that from early Sept. when the above piece was written Congress has gone on down to 9 from 13 while Obama's is at least back to 42 or 43. There were a couple of Obama polls that bounced down to 39. (and I frankly don't know if you get down to 13, if going on down to 9 is really significant. But then again, going from the 20 area to the 10 area in 4 or 5 months looks pretty much like a 50% drop).

When you get into that

Oxy Mora — Fri, 28 Oct 2011 19:00:07 +0000

In reply to the experience of the bank

When you get into that position, it's a full time job dealing with creditors and banks and an extremely stressful job at that. Typically the other thing that happens is that customers are also having a bad time of it and they slow down paying you what they owe for services and products already delivered.