The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    Donal's picture

    Who Can Spend?

    By Donal on Sun, 01/23/2011 - 8:57pm | Media


    In good news for my profession, architectural billing has come back from the abyss.



    But home starts are still in the doldrums. A few times each week, industry reps visit our office for what we call lunch 'n learns. Sometimes they follow an AIA-approved presentation without using (too many) references to brand names, and sometimes they just introduce us to their products. They always ask if we're busy, but lately they've been making it very clear that construction sales are very slow. That's one anecdote, and here's another. We visited Lowe's and Home Depot this weekend. In our town, Lowe's is usually hopping, but was extremely quiet for a weekend. Home Depot is the new guy in town, and customers were outnumbered by staff.

    I already posted about James Hamilton at Econbrowser releasing a paper, Historical Oil Shocks (pdf), establishing a relationship between oil price shocks and recessions. With the recent rise in gasoline prices, Hamilton asks, How much are gasoline prices weighing on consumers? and arrives at the unsurprising point that:

    The correlation between consumer sentiment and gasoline prices is reasonably strong. ... increases in gasoline prices are usually accompanied by a drop in consumer sentiment. ...

    All of which is consistent with the assessment I offered last month. Rising oil prices are not enough to derail the recovery, but they are perhaps starting to have some effects.

    In response, rjs commented:

    this shouldnt be a surprise at all ... according to a Pew survey on Dec 15th, 29% are having trouble affording food, and 48% are finding it difficult to pay for electric and heating bills ... so any price increase of another necessity would just beat them down more ...

    however, the underclass is not driving consumer sales; retail sales were driven by double digit increases at Tiffany's, Saks Fifth Ave, Louis Vuitton, Nordstrom and other high end retailers, punctuated by increases of 35% in sales of cadillacs and 29% in porsches, it appears that was all driven by the same top 1% who will be getting the big obama tax cuts ...

    we need different consumer sentiment indicators for the two classes of consumers, the one that matter & the ones that dont count ...

    Following his links, according to Decline of the Empire, results of the Pew poll are being ignored in the MSM:

    I just quoted Pew, and you read the quote, but I want to make sure all of us truly absorbed what it says. So let me repeat the information as a series of bullet points.

        * Affording basic necessities remains a struggle.
        * 51% say it is difficult to afford health care.
        * 48% say the same about their home heating and electric bills.
        * 29% say it is difficult to afford food.

    Why isn't this information Front Page News? Can you see the headline? I can see it, splashed across the top of the front page of the New York Times—

        29% of Americans Say It's Difficult To Afford Food

    Why haven't we seen this headline? Or this one?

        48% of Americans Say It's Hard to Pay Their Heating And Electric Bills

    Anecdotally again, at a family Xmas party I told my niece that we were away from the internet for the long weekend. She replied that I should be able to check Facebook on my smartphone. She was so surprised that we don't have smartphones. I think I may be the only one in my family and my office without a smartphone. Sometimes I feel like the only one on light rail without a smartphone, too. I wonder how long people can go on spending for voluntary utilities like wireless and internet in the face of higher energy and food costs?

    Based on his Guardian link, Deepening crisis traps America's have-nots it does seem that consumer sales are being driven by those that can afford luxuries:

     

    There is a telling detail in the US retail chain store data for December. Stephen Lewis from Monument Securities points out that luxury outlets saw an 8.1pc rise from a year ago, but discount stores catering to America’s poorer half rose just 1.2pc.

    Tiffany’s, Nordstrom, and Saks Fifth Avenue are booming. Sales of Cadillac cars have jumped 35pc, while Porsche’s US sales are up 29pc.

    Cartier and Louis Vuitton have helped boost the luxury goods stock index by almost 50pc since October. Yet Best Buy, Target, and Walmart have languished.

    Such is the blighted fruit of Federal Reserve policy. The Fed no longer even denies that the purpose of its latest blast of bond purchases, or QE2, is to drive up Wall Street, perhaps because it has so signally failed to achieve its other purpose of driving down borrowing costs.

    The retail data can be quirky but it fits in with everything else we know. The numbers of people on food stamps have reached 43.2m, an all time-high of 14pc of the population. Recipients receive debit cards – not stamps -- currently worth about $140 a month under President Obama’s stimulus package.

    The US Conference of Mayors said visits to soup kitchens are up 24pc this year. There are 643,000 people needing shelter each night.

    Jobs data released on Friday was again shocking. The only the reason that headline unemployment fell to 9.4pc was that so many people dropped out of the system altogether.
    Topics: 
    Media

    Comments

    One thing that I have seen in the NYC market is that architects are getting pulled more into the estimating side than before. They use to draw plans, now they crank "proposals." I would love to see the billings information laid out over against actual labor. I bet it matches the hit to miss ratio of contractors.


    by moat on Sun, 01/23/2011 - 9:09pm

    We're also fast tracking much more than before, meaning they start construction before we're finished with drawings.


    by Donal on Sun, 01/23/2011 - 9:14pm

    I noticed that in Florida, they seem to finish the construction before the architects start the drawings.


    by cmaukonen on Sun, 01/23/2011 - 9:44pm

    Thought you might be interested in a couple of related items:

    AdAgeSTAT blog's The Great Disappearance of Wealth

    Kevin Drum's Chart of the Day: Financial Assets

    #mce_temp_url#

     


    by EmmaZahn on Sun, 01/23/2011 - 10:07pm

    I am torn between what to support?

    I own real estate, and the only way for me to recover form the purposed destruction of housing values, is that a shortage should occur.

    Why didn’t we tear down the homes after the insurance companies paid off?

    The Obama administration purposely allowed the housing market to devalue; it is the biggest transfer of wealth since the days of the RTC.

    While Obama spouts off, about how we need to sell our products overseas, we the people have it already figured it out; we'll compete when our wages have averaged out with the rest of the world.

    GE hiring a few thousand workers to make generators sounds good, till you realize how many millions of jobs were lost. China won’t copy the design and eventually, building their own? 

    The race to the bottom became a reality, and Obama and his team presided over it.   

    Housing values will never come back. because they don’t want them to.

    Once the supply of foreclosed homes is gone, builders will offer cheaper homes, continuing to undercut homeowners who still own existing homes.

    As I  wrote, I am torn because the Obama administration,  pitted another American worker against me, so that the fat cats could extract more profits for themselves.

    It was all about screwing over the existing homeowners PURPOSELY.


    by Resistance on Mon, 01/24/2011 - 1:25am

    29% say it is difficult to afford food.

    Yessiree Bob, that would sure make a nifty headline in the New York Times. Especially if put along side some scandal about war profiteering... oh sorry, the "military industrial complex". 14% of the nation on food stamps... and we go around the world smugly telling other people how to run their affairs? Very nice post Donal!


    by David Seaton on Mon, 01/24/2011 - 5:33am

    Actually, I think the headline in the New York Times would go something like, "Jesus was right when he said the poor would always be with us" - with a lede of "Despite paying no income taxes, 29% say it is difficult to afford food." You can be sure there'd be a reference to the Douthat essay that WKW just mentioned.


    by Atheist (not verified) on Mon, 01/24/2011 - 8:28am

    Re: Following his links, according to Decline of the Empire, results of the Pew poll are being ignored in the MSM,,,,,Why isn't this information Front Page News? Can you see the headline? I can see it, splashed across the top of the front page of the New York Times.

    I distinctly remember this headline on the front page of the dead tree version of the New York Times already way back on November 28, 2009:

    Food Stamp Use Soars, and Stigma Fades

    I remember it precisely because they had this big map to go with it:

    Food Stamp Usage Across the Country

    and I studied it extensively.

    The Times covers issues of U.S. poverty and the struggling classes very often and give those stories strong play in the dead tree version which I subscribe to. (While this is a whole 'nother issue, I should also mention that the dead tree Times even has a tradition of  branching out into activism on this front--for many years they have their "Neediest Cases" campaign in the last two months of the year--no matter what the economy is doing-- where they give daily space and much reporters' time to specific heartrending stories on the suffering and needy and the difference that a little bit of help had made in their lives in order to encourage donations.)

    Virtually every time I see someone say "the MSM isn't covering this," I  can show examples that the New York Times has been. That's not just blather, I've done that many times. Here's an example from less than a month ago here on Dag Blog, where I  point out that the New York Times does cover the prisons topic extensively.

    It's impossible to know what every blogger or writer who uses this argument means by "the MSM," but it seems to me a facile way of avoiding confronting the real problem: that most prefer to avoid reading  or listening or watching on a lot of topics, and with the internet now, they can chose what news they get. And if you watch "most popular lists" on newspaper websites, as I do, those things are very different from what editors of dead tree versions stress as important. There is a noted difference with newspaper website editing vs. dead tree versions; the former pander much more to "most popular."

    Last week, the Times had this lead editorial: Poverty and Recovery, where the editors argue against all the slash the budget talk in Congress by pointing out that What analysts have found is that the antipoverty effect of government intervention in 2009 was profound. Need I point out that that article is not on the any of the "most blogged," "most emailed" or "most popular" lists? But it was on the top of the editorial page in the dead tree edition, and that's why I recall reading it.

    I am not going into all of this because I want to promote the Times or defend whatever people mean by "the MSM." It's because really do believe the whole "it's because the MSM is shirking it's duty" argument, whatever the topic, is quite delusional and is hurting actual progress because people use it as an excuse.  It's a way to escape thinking about what the real problem is.

    The stories are almost always being covered, and quite well, and with search engines, you can find them. that's not the problem.That when it's being said "the MSM isn't covering it," it should instead be said "the majority is choosing not to read and hear  or watch about this or think about this." We aren't going to solve any problems by blaming "the MSM," because the MSM is really us, and that includes blogs. Everyone is their own editor now--and as Donal reminds me with his mention of it, it seems to be getting worse: many are choosing to get their news of the day via Smartphone and Facebook recommends, and every media outlet and blog , it seems, is begging for Facebook recommends.

    But the delusionary nature of the "it's the MSM's fault" argument goes further in this particular case . Here's a Times piece from this last October that really says it all on that:

    Running Against Food Stamps
    October 17, 2010, New York Times
    By FRANCIS X. CLINES

    Ignoring Republicans’ role in unleashing the recession, Newt Gingrich is advising his party’s candidates to make a campaign issue of the fact that food stamp distribution has hit a historic high.

    If you google "Gingrich food stamps," you get 83,000+ results, with Newsweek, CBS and Fox News among the first page results. It's delusional and absurd to imply the problem is simply that everyone in "the MSM" is ignoring this problem when Newt Gingrich is advising Republicans to run on it, and that story itslef was covered by "the MSM." And when shortly thereafter, Republicans win the House from the Democrats. See where the blame the MSM argument gets you? Deluded about realities, because you have this mysterious monster "the MSM" to blame.


    by artappraiser on Mon, 01/24/2011 - 10:57am

    I think this is a variation of the If The King Only Knew type of complaint - subjects wishing that their rulers knew what was really happening away from court, certain that they would step in and set things right. Instead we have writers and bloggers with a viewpoint, certain that the people would set things right if only the government or the media would allow the truth to be told. The ugly alternative is that many people are content to keep running and let someone else save the slower members of society from the wolves.


    by Donal on Mon, 01/24/2011 - 11:04am

    Truth is on the side of the oppressed.
    Malcolm X


    by Resistance on Mon, 01/24/2011 - 4:45pm

    Rare blatant admission of ratings-driven news coverage decisions:

    "Barack Obama got a question about legalizing pot near the beginning of his campaign and he was very dismissive about it. But it's a big issue for people under 40," Uygur said. "When we do stories about legalizing pot, our ratings spike, because we listen to our audience."


    He was on a blatant crass commercialism roll:


    Uygur touted the potential of web video to create a marketplace where individual creator brands superseded network brands, observing that internationally available websites like YouTube create content that everyone in the world can see, whereas many networks restrict both carriage and web access to their content to individual cable providers within a limited selection of countries.


    from

    Young Turks chief mulls MSNBC moves/
    Uygur see opportunity in Olbermann exit, web video
    By Sam Thielman, Variety, Jan. 25, 2011


    by artappraiser on Thu, 01/27/2011 - 9:26pm

     

    Another interesting chart on employment levels - US versus Europe.

     


    by Obey on Mon, 01/24/2011 - 12:00pm

    For those (such as me, prior to a bit of Googling) unclear on the definition, "prime age" is evidently between the age of 25 and 54. Either that, or its ages that are only divisible by one and themselves.


    by Atheist (not verified) on Mon, 01/24/2011 - 12:08pm

    Good post, Donal. Here's a statistic to add to the stack, this one from Peter Tufano, a Harvard Business School professor who is soon to take over as Dean of the business school of Oxford.
    Tufano's specialty is consumer finance and he has done some good work.

    One of Tufano's surveys asked U.S. adults if in a period of 30 days they could, from all sources including family--could the respondents come up with $2000 cash.

    25% said definitely not and another 25% said probably not. This paints as good a picture as anything I've seen about how close people are to the disaster of a medical bill, loss of a job, or even a transmission going out on the car.


    by Oxy Mora on Mon, 01/24/2011 - 2:33pm