HP firmly believes you'll now see a consumer-led recession, as they wake up to the reality that the housing ATM closed, they actually owe all that money to someone, their phantom equity is falling, they haven't saved in years, their wages haven't increased, inflation (real inflation, not the government number) is out of control, their credit cards are maxed out, and they're in a whole heap of trouble.
Keep in mind consumer spending represents 70% of our entire economy.
No more trips to Ethan Allen, no more spending sprees at Home Depot, no more dinners at PF Changs. It's time to tighten the belt, hunker down and get back to reality.
Confidence among U.S. consumers fell more than forecast in August as Americans paid higher prices at the gas pump.
The University of Michigan's preliminary index of consumer sentiment declined to 78.7 from 84.7 in July. The measure has averaged 88.1 since monthly data were first compiled in 1978.
``The housing downturn and the cumulative effect of energy and electricity price increases and higher interest rates, among other factors, are definitely having an impact on the consumer,'' Fisher said.
``The housing boom's behind us and the bubble is deflating very rapidly,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.
August 19, 2006
Empty malls: Consumer euphoria turns into a consumer-led recession - Consumer confidence tumbles again
Subscribe to:
Post Comments (Atom)
31 comments:
Dow: Up
Gold: Down
COP: Down
Keith: Sad
NASDAQ: Down 9% since May
Gold: Up 45% past year
COP: Near its all time high and going higher
Keith: Ecstaticly renting in London
Chickensh*t: Unemployed realtor blaming the messenger
from http://tinyurl.com/s8nrt
But I do think a fall will happen sooner rather than later, because there are some big stresses on the system. Nobody really knows the degree to which high consumer debt, the housing bubble, huge budgetary and trade deficits, and the insane number of outstanding derivatives could amplify a fall. Things could collapse incredibly quickly.
if consumer confidence keeps falling (which it is) you'd have to be a fool to think they're gonna keep spending at the same rate or more
there is no more telling sign than this one. refuse to listen at your peril
housing rolled over and the consumer quickly followed
Mall - a place where idle people go to mill around and spend money they don't have. I hate malls.
And I really hate strip malls.
Farm Girl
I was down to the nearby mall last Saturday. My car (small 2000 Chevy, paid off) needed some recall work done and I had time to kill. I could not believe how totally dead it was, and this on a Saturday! This place used to be packed! There is a positive note, however. Come Black Friday, if you do have the money, the sales should be the greatest in memory! Last year at Sears, some kid/salesperson told me that it would be years befors the big flat screens EVER came down in price. HAH! We shall see. Not that I have any urge to buy one, think I'll wait untill the 'yard/moving/save our house from foreclosure' sales in yuppie neighborhoods!
North Jersey and Eastern Pennsylvania report. Retail is way down. The malls may have people in them, but they are not buying many items. (Food court always a winner.) Numerous houses for sale that just sit for months, use to sell in days. Most do not know the ship has hit an iceberg yet.
From my observation, here in Reno at the new Summit Sierra outdoor mall, there arent that many people walking around, even on the weekend. In my opinion, this new mall has a lousey layout, and is nothing like it orignally was sapose to be.
The new Dillards store there has tables down almost all the isles in the mens department and houswares departs with a constant 50% off sale, plus 30% more on top of that on certain days to get rid of all the merchandise. Ross stores should see more merchandise coming their way...
The best part- No more lines at Starbucks in the Meadowood Mall! Its wonderful to just walk up and buy a plain coffee without standing for 20 minutes!
Home Depot and Lowes both have tables set up on major isles selling returned older items people bought and never used....
I know this to be true, because a friend who is the American stereotype, she owns a home and is helco'd to death, laughed when she told me she returned items to Lowes that were over a year old, without a receipt mind you - smiled alot and gave the manager the sob story. Everything in her house still have price tags because if she decidedes to return it, she just has to dig up the receipt. Whenever she is short, she returns items she bought on the credit card. Shes not getting cash, but it is taken off her balance.
Her two kids are in private Christian school, and she even gave the administators the sob story last year about how she couldnt make her house payment (was a lie) so that she wouldnt have to pay tuition!
She already has done a lifetime of shopping since Feb - new custom fabric sectional couch and livingroom set, shag carpet, new car, vacation to Yosemite, dinners out, clothes.... she is now MAXED OUT. (This doesnt count everything else she bought from refing. 2-3 times before) Now she is tied down with higher house and NOW car payments, and NEW credit card payments after she finally paid them all off....
This is America-the "I have to have it now country" -no wonder the malls are empty.
"The consumer will stop spending only when he absolutely cannot anymore. even the average joe can see some of
hese problems(inflation, weak jobs, slowing homes)etc..but he
keeps going because its better than being stuck an hour outside of Atlanta, Houston, Denver etc.. doing nothing and being trapped at home. Its not just economic, its away to kill time."
I couldnt agree more-well said AS#1. Hopefully, this will force people to do something else instead of shopping. Things like playing board games, cooking, fishing or going on hikes. Its wonderful to enjoy nature, - maybe people will learn to enjoy the simple things in life once again.
Saw an interesting financial presentation last night. Apparently as of June, the S&P500 was up 45% from it's post tech bubble low but P/E had decreased from mid 20's to to ~15.5.
Thoughts?
One more thing. Where did you get that pic Keith. It looks like the Crossgates Mall in Albany, NY.
There is no stopping the consumer. . .watch "Dawn of the Dead". . .
They will shop until after they drop!. . .Ben will lower rates back to 1% like Japan at Zero. . .anything to keep the American consumer shopping. . .
When the Bank of Japan lowered their rates to 0.1% (!) the Japanese consumer was still NOT shopping.
I shorted "RTH" (retail HOLDRs) a couple of days ago.
PS: that wasteful wench just torques me up. "They" don't hate us for our freedoms, they hate us for our greedy idiocy.
On a recent trip to the local mall, I noticed plenty of people. I also noticed no one purchasing anything or most not.
Come to find out most are there for the Air Conditioning, due to the recent Hot spell. Well it is August after all!
The current attitude of spending is rather scary. The cheap money, easy credit, by now pay later mentality is insidious. Getting consumers into a flurry of spending just because, 'You want it, buy it!' is a difficult mindset to break after so many years wih that attitude.
Consumers will be driven to pull back if they don't start 'Now', which is actually too late anyway!
Kieth said, Estatically renting in London? Complains about the high cost of living in Phoenix and then moves to London? One of the most expensive cities on the planet? You pay more for a one bedroom flat than for a 3000 sq ft house (mortgage) in Phoenix let alone what you'd get if you rent.
Gold up 45% in one year? Smart investor. House price up 45% in a year? Bubble!
I'm not saying there is a problem, Houston, just saying that fear-mongering just makes things worse. How many people are trying to dump homes because they think prices will collapse? How many of them would have just gone about their business of living if they didn't? Five homes for sale instead of three, supply and demand, self-fulfilling prophecy?
And once all those empty new homes, condos, and then millions of homeowners selling, or trying to, that will only make it a rich man's dream. They'll buy up even more of the nation's wealth (like in every epoc where the rich use bubbles to get richer) and rent those properties back to the sellers because we all have to live somewhere.
America is right where Russia was in the 80s,even down to their war with Islam. Bankrupt and the people suffered the loss of all their wealth through inflation (they didn't have the hedge of real property to weather the loss of fiat monies value) and oligarchs got richer.
"America is right where Russia was in the 80s,even down to their war with Islam. Bankrupt and the people suffered the loss of all their wealth through inflation"
I'd say British Empire ala 1945, bankrupt and unable to hold onto its colonies. And reason for it is that back then, the Pound Sterling was the world's reserve currency much like the dollar today. The USSR, however, wasn't the market maker for the world's exchanges so its collapse was an independent free fall.
Starting 2007, the US will enter a long term bear market for equities, real estate, and finally, the USD as it moves from one bearish channel (1.2-1.3 to 1 Euro) to another (1.3-1.5 to 1 Euro) to another. The end result will be a banana republic but could potentially be kept from falling into a Botswana type of 3rd world state via clean coal technologies (the US having 1/3 of the world's coal reserves) and the return of some manufacturing as things become cheaper to make locally. I hope that by 2025, we'll be back on our feet but w/o all the international entanglements.
foxwoodlief said...
Kieth said, Estatically renting in London? Complains about the high cost of living in Phoenix and then moves to London
__________
Foxwood - unique situation - living in London but expenses paid by client. No way I'd live in the world's most expensive city on my own dime. You have to be a multi-millionaire to live here
Especially with dollar getting more and more worthless every day
Any Americans interested in traveling to Europe better come now why you can still afford it
"Any Americans interested in traveling to Europe better come now why you can still afford it"
Dude, it's not like Londoners are earning the big bucks either. Most of them are barely scraping by.
Report from San Diego Horton Plaza Shopping Mall. . .
Lots of jarheads and squids (local military talk) spending their hard earned military paycheck on video games, movies, and of course the food court. . .I am so glad that SD is going back to being a nice little military town with good beaches. . .now if we can just get those housing prices down to 150K so a Petty Officer can buy a house!! For a while there, SD thought it was a real big city (Manhattan by the Sea) the Realtors were calling it.
I think one guy here hit it right - Americans love to shop and hang out at malls - what else do they have to do?
I'll check out that Mish post, thanks.
To be honest, I've actually bought more in the past six months than I have in the past six years. Why? because I see inflation starting to ramp up and desireable foreign goods like TVs and automobiles are going to be 40% more expensive in a year or two. No debt though - I paid cash.
>Find inexpensive products and services to provide instant gratification on a budget and you have got the key.
Caught me! I went to the mall yesterday and browsed thruough 3-4 stores before I bought a great new dress at terrific price!
Japanese also love to shop. Europeans love to sit at cafes and smoke. You guys act like people around the world are any better.
Don't forget skyrocketing gas prices. If they think things are bad now, wait until people have to pay $5+/gallon....
Ananopussy is right on target. Here's how it goes>
Mall shoppers now shop to Wal-Mart
Wal-Mart shoppers now shop at 99 cents or dollar stores
I tend to shop where I can get the best deal.
"Japanese also love to shop. Europeans love to sit at cafes and smoke."
But remember, it's also a part of mythology that only Americans consume and everyone else is a producer. The truth of the matter is that there are consumers everywhere.
Interesting trip to Home Depot and Lowes today. We were looking to get some end of season deals on plants. At Home Depot nursery inventory was the smallest I've ever seen, and it looked like they were using about half of the outside area to store boxed appliances. Not many shoppers for a beautiful Sunday afternoon.
Lowes had more plants but the clerk told us the manager was not happy at all the inventory remaining. No public sales though, she said they were going to wholesale all of their remaining seasonal plants in one lot next week.
It looks like both stores see the economic slow down coming and are trimming inventory.
wood cedar Tips for building or remodeling your dream home.
Home Builders
Roofing Words Tips for building or remodeling your dream home.
Post a Comment