The consumer's back baby!

[BigBagel]

A NY Times article describing the "turnaround" in the economy.

http://www.nytimes.com/2010/04/26/bu...my/26econ.html

Why?
Government stimulus?
Real vibrant private sector growth?
The last gasp of a dying consumer?
Propaganda?

[flintlock]

Re: The consumer's back baby!

Pent up demand. Also, try comparing some of these "increases" to two years ago and the picture is not so rosy. My profits are way up over last year too. But compared to pre-recession era they still suck.

[gnk]

Re: The consumer's back baby!

A NY Times article describing the "turnaround" in the economy.

http://www.nytimes.com/2010/04/26/bu...my/26econ.html

Why?
Government stimulus?
Real vibrant private sector growth?
The last gasp of a dying consumer?
Propaganda?

I think there are many reasons for this.

However, same store retail sales is not a good method of measuring retail growth. Imagine a Circuit City and a Best Buy located next to eachother. Retail spending tanks and one goes bankrupt. Obviously, the surviving store will experience a growth in sales.

I would also look to recent state sales tax revenues as a gauge.

And finally... from Calculated Risk regarding the HAMP program that seeks to assist homeowners that have recently defaulted on their mortgage:

The guidelines for servicers participating in HAMP stipulate that the borrower must submit a “hardship affidavit”. This, ostensibly, is to serve as their sworn testimony that they have been driven into default due to some particular hardship they encountered, and despite making every possible sacrifice, they can no longer “maintain payment on the mortgage and cover basic living expenses at the same time". (see HAMP Directive)

To demonstrate this, applicants are required to submit recent paystubs and bank statements. The statements are to help further corroborate the income they report (lest they forget to include all of their paystubs) and also to demonstrate that their monthly expenses are as described on their application. Which is to say that they have already ‘cut back to the bone’ and STILL are unable to make ends meet.

So how do these look in practice? The very first ‘HAMPlication’ that your correspondent pulled up recently showed a wanton disregard for minimizing spending. On the contrary, it looked like “cutting back” for this applicant does not involve such Draconian cuts as eliminating:

• visits to the tanning salon
• the nail spa
• some kind of gourmet produce market (have you seen the price of arugula?)
• various liquor stores
• A DirecTV bill that must involve some serious premium programming or pay-per-view events (or both?).
• And over $1,700 in retail purchases, including: Best Buy, Baby Gap, Brookstone, Old Navy, Bed, Bath & Beyond, Home Depot, Macy’s, Pac Sun, Urban Behavior, Sears, Staples, and Footlocker.

And that was just in one month! They were seeking to reduce a $1,880 mortgage payment that had just gotten to be a real cramp to their ability to keep a roof over their heads.

I think much of the deleveraging - nonpayment of mortgages, credit cards, etc... is fueling a good deal of retail growth. You have to hand it to the American Consumer. Where there's a will, there's a way!

[don]

Re: The consumer's back baby!

- There was a recent article comparing the 'jump' in retail sales with the states collection of sales tax, which blew most of the air out of the 'jump' sails. Wish I could find it, I'd link it.

- It's become increasingly obvious that one of the major components of the toxic mortgage buys/treasury reciprocal buys between Washington and the banks is allowing foreclosures to wallow in no-pay occupants- another important Federal stimulus in our house of fiscal mirrors. That the sheeple are acting as stupidly as they did when they bought their bubbly abodes comes as no surprise.

- Here's a recent related anecdote. My dentist's receptionist son is a cop. His wife is a school teacher. The house they're in has a $290,000 mortgage. It is now worth about $200,000. They have no trouble making their payments but she relates to me that "the banks wouldn't work with them to reduce their mortgage."

Reduce what? It turns out it's not even all bubble related. They took out a $50,000 second to improve the kitchen but nevertheless wonder why they can't get some sort of mortgage forgiveness. Meanwhile they're thinking of "moving up".

I don't watch network television. Is there an "American Entitled Morons" program currently running?

[oddlots]

Re: The consumer's back baby!

Didn't read the whole NYT article but I suspect that this is part of the answer:

http://www.ritholtz.com/blog/2010/04...e-adjustments/

[BigBagel]

Re: The consumer's back baby!

- I don't watch network television. Is there an "American Entitled Morons" program currently running?

Yes there is. It's called Meet The Press. They have a panel of entitled morons ask guest entitled morons questions each week. It's on Sunday mornings.

[don]

Re: The consumer's back baby!

Yes there is. It's called Meet The Press. They have a panel of entitled morons ask guest entitled morons questions each week. It's on Sunday mornings.

That's perfect. Sunday is our bagel breakfast day.