Consumerism |

Confidence is (Relatively) High

The latest Gallup data released just this morning showed that, after moving into positive territory for the first time since prior to the Great Recession, Americans’ confidence in the U.S. economy remained positive for a second straight week.

Actually, the index fell last week, from +2 to +1, but let’s not quibble about that.

An improving job market (albeit without the wage gains), falling energy prices, and U.S. stock indexes that remain near all-time highs were key factors behind the improved outlook as more than half of the poll’s respondents commented “everything is awesome”.

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Young and Dumb Again

Via this story by Catherine Rampell at the Washington Post comes the graphic below showing how personal savings rates have changed over the years by age group.

Recall that the personal savings rate is simply disposable income less spending, so, if you’ve got a negative savings rate, it means you’re probably not putting away much (or anything at all) for retirement while subsidizing your spending by going further into debt.

The 0-34 crowd is quickly getting back into the “buy stuff with money you don’t have” mindset as the yellow line has recently diverged sharply from the others. Presumably, some of this is being forced upon them due to wages rising slower than the cost of living.

Also, it’s interesting to note that, at the peak of the financial crisis/deleveraging , we barely got back to the savings rate of the early 1990s which, as compared to prior decades was well below the 12-13 percent norm.

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Big Misses for Retail Sales, NY Manufacturing

The Commerce Department reported(.pdf) that retail sales unexpectedly fell last month, down 0.3 percent in September after an increase of 0.6 percent in August. The declines were broad-based and this is a possible indication of slowing growth in the U.S. economy.

Excluding autos, September sales fell 0.2 percent after a gain of 0.3 percent and, excluding both autos and gasoline, sales fell 0.1 percent following a jump of 0.5 percent in August. The consensus estimate for the latter, so-called “core” retail sales, was for a gain of 0.5 percent, so, this report is being rightly viewed as a fairly big miss.

Flagging auto sales and lower gasoline prices (both down 0.8 percent) were key drivers in the overall decline, but a sharp slowdown in clothing store sales (down 1.2 percent), home improvement and internet sales (both down 1.1 percent), and furniture sales (down 0.8 percent) provide fresh evidence that the U.S. economy may struggle late in the year.

In other economic news, manufacturing activity in the New York has slowed sharply in recent weeks according to the New York Fed’s Empire State index that tumbled from a five-year high of 27.5 in September to just 6.2 in October. New orders plunged from +16.9 to -1.7 (indicating contraction), shipments fell from 27.1 to 1.1, and the inventories index rose from -7.6 to +2.2 (from contraction to expansion).

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August Retail Sales Rose Broadly

The Commerce Department reported(.pdf) that retail sales rose broadly last month, up 0.6 percent in August following an upwardly revised increase of 0.3 percent in July. Excluding autos, sales rose 0.3 percent during each of the last two months and, excluding both autos and gasoline, sales increased 0.5 percent last month after a gain of 0.3 percent in July.

So-called core retail sales, excluding autos, gasoline, building materials, and food service rose 0.4 percent during both July and August, this figure being important because it feeds directly into the calculation of Gross Domestic Product.

Sales gains in dollar terms were led by the auto industry where motor vehicles sales rose 1.5 percent. Building materials & garden equipment sales increased 1.4 percent while the much smaller miscellaneous store retailers category jumped 2.5 percent.

Falling energy prices resulted in gasoline station sales dropping 0.8 percent and general merchandise retailers were the only other major group to post a decline, down 0.1 percent.

On a year-over-year basis, retail sales rose to a 13-month high of 5.0 percent, up sharply from the winter slowdown that saw the annual sales gain dip to as low as 1.6 percent.

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