Michigan Consumer Sentiment Dives

U.S. consumer confidence fell in December to a five-month low as Americans grew more concerned about the possibility of higher taxes next year.

The Thomson Reuters/University of Michigan consumer sentiment index decreased to 72.9, the weakest since July, from 82.7 in November. Economists projected a final reading of 75 for December, according to the median of 66 estimates in a Bloomberg survey. Today’s figure was lower than a preliminary report earlier this month.

American households are growing uneasy as the federal government moves toward more than $600 billion of higher taxes and spending cuts starting early in 2013. At the same time, as the world’s largest economy enters the new year, job growth, rising home values, lower gas prices and stock market gains might help boost consumer spending, which accounts for about 70 percent of the economy. Read more>> 

374,000 jobless claims - expect revision to 377k by next week

Initial claims were unchanged from last week - thanks to the now ubiquitous upward revision of the previous week's data. This is the highest print in six weeks and the third week in a row that the claims data has been greater than expected. The market is unsure - is this enough pre-FOMC to make a real difference or just more 'seasonal' noise? One thing is sure - the trend is higher in the last six weeks, hardly a positive sign (as the 4-week moving average rises 1,500 to 370,250) - and after the standard upward revision today's 374k claims will be 377k by next week. Read more >>

Consumer Confidence Crashes to 9 Month Low

With inflation expectations soaring and jobs plentiful relative to hard-to-get falling slightly, Consumer Confidence plunged its most in 10 months to a level not seen since November of last year. It seems that despite all the hopes and prayers priced into US equity market valuations, the US Consumer remains unimpressed, unhappy, and unemployed. Of course, the 'good is bad, bad is better' market has interpreted this as a clear QE-on flag (for this millisecond anyway). Read more >>

Percentage of disposable income spent on eating-out has plunged

We have discussed this somewhat obscure indicator of our obese nation's spending comfort-factor in the past, but just as divergences from economic and non-equity market realities seem de rigeur currently, we though we'd dust it off. The percentage of disposable income spent on eating-out has plunged dramatically in the last two months (the biggest drop since Lehman!) - after running up in a well-correlated manner with stocks - from the 2009 lows. It would seem that once again, equity hopefulness-divergence is writ large here and yet consumers are not buying the hype/hope.

The ratio of eating-out to disposable income has plunged by its most in 4 years over the last two months...

Read more >>

Consumer Spending Stalls, Morale at 6-Month Low

Reuters
Consumer spending growth ground to a halt in May as auto purchases flagged, while confidence ebbed to a six-month low in June, the latest signs of trouble for the economy. Although manufacturing activity in the Midwest picked up this month, it offered little cheer for an economic recovery that has been hit by turbulence from the debt crisis in Europe and a lack of clarity on the course of fiscal policy at home.

"We are at a stall speed expansion here," said Tim Quinlan, an economist at Wells Fargo in Charlotte, North Carolina. "We have a consumer who is sort of losing steam."

Forget All The Hype - US Consumers Are Not Spending

The Commerce Department said retail sales rose only 0.1 percent last month. Consumers cut spending sharply at department stores and clothing stores. And sales dropped 1.8 percent at hardware stores.

In the January-March quarter, overall economic growth slowed to an annual pace of 2.2 percent. That's down from the 3 percent increase in the October-December period. And job growth has slowed from the start of the year, where the average fell to just 135,000 jobs per month in March and April.

Excepted from Source.

Next Bailout: Spain - Economy Faces "Crisis of Huge Proportions"

BARCELONA, SPAIN - MARCH 30: A Carslon Wagonlit Traves employee is seen through a broken window on March 30, 2012 in Barcelona, Spain. 

Spain's sickly economy faces a "crisis of huge proportions", a minister said on Friday, as unemployment hit its highest level in almost two decades and Standard and Poor's downgraded the government's debt by two notches.

Unemployment shot up to 24 percent in the first quarter, one of the worst jobless figures in the developed world. Retail sales slumped for the twenty-first consecutive month as a recession cuts into consumer spending.

"The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions," Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.

Standard and Poor's cited risks of an increase in bad loans at Spanish banks and called on Europe to take action to encourage growth. More...

Consumer Confidence Falls to Two-Year Low

Consumer confidence unexpectedly slumped in October to the lowest level since March 2009, when the U.S. economy was in a recession, as Americans’ outlooks for employment and incomes soured.

Limited job availability, deteriorating home values and the threat of a European debt default are weighing on sentiment. A drop in optimism helps explain concern among some companies like Levi Strauss & Co. that spending will falter during the holiday shopping season.

“Dysfunctional labor and housing markets and the turmoil in Europe all are drags on confidence,” Robert Dye, chief economist at Comerica Inc. in Dallas, said before the report. “Consumers are fundamentally constrained, and consumer spending won’t be leading the economy forward.” More...

Meredith Whitney: "Government Out of Bullets"

CNBC.com
The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.

"I think they're out of bullets," Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.

Primary among her concerns is the lack of credit access for consumers who she said are "getting kicked out of the financial system." She said that will be the prevailing trend in 2010.

Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.

With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.

"What's so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit," Whitney said.

"You're going to get a situation where you revert from a consumer standpoint," she added, "where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders."

The problems taken together also will pose difficulties for investors.

"I have 100 percent conviction that the consumer is not getting any better and there's not more liquidity," Whitney said. "So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure."

The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.

"I don't think you can cut taxes enough to stimulate demand," Whitney said. "For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it's a real issue. You can't get around it. This has never happened before in this country."