Consumer Spending in U.S. Declines - blamed on Sandy [wink, wink]

Spending by U.S. consumers unexpectedly declined and incomes stagnated in October as superstorm Sandy kept some in the Northeast from getting to work or from shopping at malls and car dealerships.

Purchases decreased 0.2 percent, the weakest reading since May, after a 0.8 percent gain in the prior month, Commerce Department figures showed today in Washington. The median estimate of 79 economists surveyed by Bloomberg called for no change in so-called nominal sales. Incomes were unchanged, held down by a drop in wages caused by Sandy, Commerce said.

The storm shuttered hundreds of retailers when it made landfall on Oct. 29, temporarily countering the benefit from rising consumer sentiment that has brightened the holiday- shopping outlook. Faster job and wage gains would help stoke household spending after a third-quarter slowdown, helping explain why the Federal Reserve is pursuing policy aimed at spurring employment. Read more >>

Durable goods drop worst since recession

New orders for long-lasting U.S. manufactured goods in August fell by the most in 3-1/2 years, pointing to a sharp slowdown in factory activity even as a gauge of planned business spending rebounded.

The Commerce Department said on Thursday durable goods orders dived 13.2 percent, the largest drop since January 2009, when the economy was in the throes of a recession. Orders for July were revised down to show a 3.3 percent increase instead of the previously reported 4.1 percent gain.

Economists polled by Reuters had expected orders for durable goods -- items from toasters to aircraft that are meant to last at least three years -- to fall 5 percent. Last month, the drop in orders reflected weak aircraft and automobiles demand. Boeing received only one aircraft order in August, down from 260 in July, according to information posted on the plane maker's website. 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."

Housing Starts Plunge

CNBC reports that housing starts fell in May. The Commerce Department said on Tuesday that groundbreaking on new homes dropped 4.8 percent to a seasonally adjusted annual rate of 708,000 units. The reading, which is prone to significant revisions, was below the median forecast in a Reuters poll of a 720,000-unit rate. 

This from Zero Hedge:

We just got another indication of how US housing has "bottomed"... if only in terms of promises and strong words. While permits, or promises that at some point in the indefinite future, a house will be built, soared from 723K to an annualized rate of 780K, the highest since September 2008, on expectations of a 730K print, actual holes dug, or Starts plunged from a revised 744K to 708K, the biggest miss of expectations of a modest improvement from the pre-revision number since April 2011, and the biggest sequential drop since August 2011. 

And while recently all the starts strength was in multi-family units as America prepares to become a renter society, in May it was actually the 1-unit houses that saw an increase from 500K to 516K units, as multi-family tumbled from 236K to 179K. So much for the REO-To-Rent plan? Finally, looking at actual completions, the number tumbled by 10.3% from an annual rate of 667K to 598K in May.

Factory Orders in U.S. Decline for Second Month

Orders to U.S. factories unexpectedly fell in April for a second month, pointing to a deceleration in manufacturing as the global economy cools.

Bookings dropped 0.6 percent after a revised 2.1 percent decrease in March, the first back-to-back declines in more than three years, figures from the Commerce Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey.

Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. following a reduction in a government tax credit may limit manufacturing this year. A falloff in hiring may also be causing American households to curb spending on big-ticket items like autos, eliminating another source of strength. Read more >>

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.

Factory Orders Post Biggest Decline in Three Years

CNBC reports new orders for U.S. factory goods in March recorded their biggest decline in three years as demand for transportation equipment and a range of other goods slumped, government data showed on Wednesday.

The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February. Economists had forecast orders falling 1.6 percent after a previously reported 1.3 percent increase in February. 

Zero Hedge claims the prior February increase of 1.3% was revised lower to 1.1%, netting out as a negative two month change. "Where this number was troubling is that this 2.6% swing brought the index to its biggest decline since March 2009 when the pumping of trillions started"

Existing home sales drop 3.8%; sales more than 15% lower than in May 2010

Sales of existing homes fell in May, as severe weather and high gas prices weighed on the shaky housing market.

Home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April, the National Association of Realtors said Tuesday.

Sales were more than 15% lower than in May 2010.

Economists had expected a May sales rate of 4.79 million existing homes, according to consensus estimates from Briefing.com.

"Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," said NAR chief economist Lawrence Yun.

Gas prices surged earlier this year, pinching household budgets and putting a damper on consumer spending. In addition, sales were hurt by tornados and flooding in May that devastated parts of the South and Midwest. More...

Big U.S. Firms Cut Hiring, Shift Hiring Abroad

U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization's effect on the U.S. economy. The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That's a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad. More...

Gold is the final refuge against universal currency debasement

Ambrose Evans-Pritchard
“We live in an amazing world. Everybody has big budget deficits and big easy money but somehow the world as a whole cannot fully employ itself,” said former Fed chair Paul Volcker in Chris Whalen’s new book Inflated: How Money and Debt Built the American Dream.

“It is a serious question. We are no longer talking about a single country having a big depression but the entire world.”

The US and Britain are debasing coinage to alleviate the pain of debt-busts, and to revive their export industries: China is debasing to off-load its manufacturing overcapacity on to the rest of the world, though it has a trade surplus with the US of $20bn (£12.6bn) a month.

Premier Wen Jiabao confesses that China’s ability to maintain social order depends on a suppressed currency. A 20pc revaluation would be unbearable. “I can’t imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs,” he said.

Plead he might, but tempers in Washington are rising. Congress will vote next week on the Currency Reform for Fair Trade Act, intended to make it much harder for the Commerce Department to avoid imposing “remedial tariffs” on Chinese goods deemed to be receiving “benefit” from an unduly weak currency.

Japan has intervened to stop the strong yen tipping the country into a deflation death spiral, though it too has a trade surplus. There is suspicion in Tokyo that Beijing’s record purchase of Japanese debt in June, July, and August was not entirely friendly, intended to secure yuan-yen advantage and perhaps to damage Japan’s industry at a time of escalating strategic tensions in the Pacific region. More...

Highest Consumer Price Increase in a Year

A busy month for car dealerships lifted retail sales for the first time in three months while more expensive food and gas boosted consumer prices by the most in nearly a year.

Retail sales rose 0.4 percent last month, buoyed by auto and gasoline station purchases. Most retailers reported declines for the month. Excluding autos, sales climbed 0.2 percent, the Commerce Department said Friday.

Consumer prices rose 0.3 percent in July, the Labor Department said. That's the largest increase since last August to the Consumer Price Index, the government's most closely watched inflation measure. Energy prices jumped for the first time in five months.

Excluding volatile food and energy prices, the so-called "core" index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That's up slightly from last month's 1.1 percent pace but still a mild increase.

Broad declines in retail sales have economists concerned that spending will slow further in the second half of this year. Households are saving more and spending less as they struggle with high unemployment and lackluster job growth. More...

Home construction sinks to lowest level since Oct.

Image via Wikipedia

Home construction plunged last month to the lowest level since October as the economy remained weak and demand for housing plummeted.

But driving the June decline was a more than 20 percent drop in condominium and apartment construction, which makes up a small but volatile portion of the housing market. Construction of single-family homes, the largest part of the market, was down slightly. It dropped 0.7 percent.

Overall, construction of new homes and apartments in June fell 5 percent from a month earlier to a seasonally adjusted annual rate of 549,000, the Commerce Department said Tuesday. May's figure was revised downward to 578,000.

One bright area of the report was an increase in building permit applications, which are a sign of future activity. They rose 2.1 percent from a month earlier to an annual rate of 586,000, however this was also driven by apartment construction.

A slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after tax credits that spurred sales expired at the end of April.

"The housing market remains the Achilles heel of the recovery," said M. Cary Leahey, a senior economist at Decision Economics. "It is hard to imagine confidence recovering to healthy levels until the housing market experiences much less distress." More...

Pew: 92% of Americans give economy Negative Rating

Pew Research Center for the People & the Press

Americans are united in the belief that the economy is in bad shape (92% give it a negative rating), and for many the repercussions are hitting close to home. Fully 70% of Americans say they have faced one or more job or financial-related problems in the past year, up from 59% in February 2009. Jobs have become difficult to find in local communities for 85% of Americans. A majority now says that someone in their household has been without a job or looking for work (54%); just 39% said this in February 2009. Only a quarter reports receiving a pay raise or a better job in the past year (24%), while almost an equal number say they have been laid off or lost a job (21%). Read more

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Consumer sentiment drops in April

MarketWatch
As economic worries persist, U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index.

The consumer sentiment index fell to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch had been expecting the sentiment index to hit 75 in April. The index hit a 28-year low of 55.3 in November 2008.

While the economy has been picking up, consumers remain worried about jobs and their personal finances.

Elsewhere Friday, fresh data from the Commerce Department showed that new construction of U.S. housing units revealed an upward trend in place since the beginning of the year. Starts rose 1.6% in March to a seasonally adjusted 626,000 annualized units, stronger than the 610,000 pace expected by economists surveyed by MarketWatch. Read more about housing starts.

According to a Reuters report, the reading on current economic conditions fell to 80.7 in April from 82.4 in March. The consumer expectations reading fell to 62.3 from 67.9, according to Reuters. Also according to Reuters, the one-year inflation expectation index rose to 2.9% from 2.7%.

Rare Interview With John Williams [Shadowstats] on US Collape and Hyperinflation

King World News
Listen to Interview
Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. In this interview John discusses looming hyperinflation, staggering unemployment, the reality of the US economy, the Fed’s inability to stimulate the economy, consumer’s inability to spend, the coming collapse of the US Dollar, how listeners need to prepare themselves for this crisis, the Fed’s debasement of the Dollar, an intensifying great depression, disappearance of cash as we know it and more.

Friday, December 4, 2009

John Williams
Biography from shadowstats.com
Walter J. “John” Williams - Founder of Shadow Government Statistics Newsletter:

Analysis Behind and Beyond Government Economic Reporting

Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.

Formally known as Walter J. Williams, my friends call me John. For more than 25 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.

One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless.

That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present. For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York Times and Investors Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite minor changes to the system, government reporting has deteriorated sharply in the last decade or so. -- John Williams

The Shadow Government Statistics Newsletter and Specialized economic consulting services including customized forecasts and analyses of the general economy, as well as for specific industry, product or company results.