Americans Cut Restaurant Spending as Taxes Bite: EcoPulse
By Anna-Louise Jackson & Anthony Feld
March 20 (Bloomberg) — Restaurants are reeling from their worst three months since 2010, as American diners spooked by higher payroll taxes cut back on eating out.
Sales at casual-dining establishments fell 5.4 percent last month, after declining 0.6 percent in January and 1.6 percent in December, according to the Knapp-Track Index of monthly restaurant sales.
Wrong.
If there’s no inflation problem there’s no deficit problem:
The country isn’t facing an immediate debt crisis, House Speaker John Boehner (R-Ohio) said Sunday, but he argued that Congress and the president must reform entitlements to avert one that lies dead ahead.
“We all know that we have one looming,” Boehner said onABC’s “This Week”. “And we have one looming because we have entitlement programs that are not sustainable in their current form. They’re going to go bankrupt.”
Just maybe $5 billion less in net govt spending each weak does matter???
U.S. Auto Sales Pace at Slowest Since GM, Chrysler Bankruptcies
By Alan Ohnsman
March 13 (Bloomberg) — Sales of new cars and trucks in the U.S. have cooled to the slowest pace in more than three years even as automakers increase spending on incentives.
The average number of days needed to sell new vehicles rose to 64 at the end of February, the most since August 2009, Bloomberg Industries said in a report today. Carmakers have also raised incentives to 7.8 percent of a vehicle’s price to lure buyers, the highest ratio since 2011, analyst Kevin Tynan wrote in the note. Incentives increased more than 8 percent in both January and February, he said.
Vehicle sales have remained a bright spot for the U.S., expanding more than 10 percent annually since 2010, the year after bankruptcies for the former General Motors Corp. (GM) and Chrysler LLC. Growth is slowing this year, with total light- vehicle sales rising 3.7 percent in February, according to Autodata Corp.
Still, it’s premature to be concerned as the pace of growth is returning to pre-recession levels, said Jessica Caldwell, industry analyst for Edmunds.com.
“Even though it’s creeping up a bit, it doesn’t start to raise eyebrows at this point,” she said. “The number of days needed for a sale have risen, but it’s stabilized in the low 60s.”
Brands seeing some of the biggest increases in average numbers of days needed to sell their vehicles include Chrysler, GM’s Chevrolet and GMC brands and Ford Motor Co. (F)’s Lincoln line, said Caldwell, who’s based in Santa Monica, California.
Addition: Excellent color from Greg, thanks!
On Wed, Mar 13, 2013 at 9:41 AM, Greg wrote:
Hi Warren – to be clear, I do believe there is some impact from less net govt spending on the industry, but I wanted to point out that the author of this article fails to account for fewer selling days in the U.S. during Feb 2013 vs. Feb 2012 (24 days in Feb 2013 vs. 25 days in Feb 2012). Adjusted for selling days, total U.S. Feb 2013 light vehicle sales were up +8.0% YoY. On a seasonally adjusted rate, US light vehicle SAAR is up 8% YTD, although the 15.3mm unit selling rate in Feb was only up 6.25%.
Avg. vehicle sales in the U.S. between 2001-2006 were 16.9mm units before falling off a cliff during the crisis, troughing at 10.4mm units in 2009 (which would have had a 9-handle were it not for “cash-for-clunkers”). A lot of that pre-crisis volume was driven by large incentives to drive volumes and share as OEMs we only profitable well north of 14mm SAAR. Breakevens for OEMs in the U.S. were reduced to just north of 10mm SAAR during the crisis, and one view is that, going forward, the new normalized U.S. SAAR may not reach the level of the early 2000’s, meaning 2013’s consensus 15.5mm units is approaching peak. Nonetheless, we’ve seen incentive activity increasing notably in Jan and Feb, reversing the trend of post-crisis discipline, which may be another signal that it’s becoming more difficult for households to pull the trigger on car purchases.
He’s been calling recession for a while.
The ‘stall speed’ thing is the pro cyclical nature of the private sector I recently discussed.
Achuthan on how he defines stall speed:
“That is a concept we do not use that often. The Fed uses it because they are using models. We do not use models. We use leading indicators. The Federal Reserve board in 2011 came out with a study examining the idea of stall speed, you look at GDP and gross domestic income, the counterpart, which should statistically be actually the exact same thing. When they looked at all the different measures, they found that the two quarter annualized GDI growth rates going below 2% was a signal of an economy slipping into recession. When you look at that measure now, what you see is that in the second quarter of 2012 it fell below 2%. It went to 1.5% and then in the third quarter, it fell further to 0.4%. By last fall, when the unemployment rate was plunging and people did not believe it was plunging and then the Fed came out and said, hey, we will give you q-ternity… It kind of makes sense in the context of their own recessionary stall speed.”
On whether the U.S. is in a recession now:
“I think that a recession began around the middle of last year. The reason I think that is because number one, the stall speed and GDI last year, and also when you look at the weakness in the indicators that define a recession — output and income and sales — initial jobless claims are not used to define recession. You actually use overall employment payroll or household employment, and there, if you simply look at year-over-year growth rates, what you see is they are falling. Right now on the Bloomberg I think the consensus is 160-170 for tomorrow. Even if that is true, you are going to see year-over-year payroll jobs growth go to a 16-month low. It’s going the wrong direction. The headlines say jobs are improving but they are actually going down.”
On what it would take to admit that he is wrong about the U.S. being in a recession:
“I think some facts, right? I am pointing out that the GDP number that you have from Q4 is recessionary. Central banks are now going to be targeting nominal GDP fairly soon, right, because in theory, they could impact the cash economy. You see nominal GDP growth by Q4 year-over-year at 3.5%, even with your marginally higher revision. Any time in the 65-year history of GDP growth it has been below 3.7, you have been inside a recession… The other thing is, you are not in a 2% economy. Everybody keeps saying it, but just because you are saying it does not mean it is true. You’re in weaker than a 2% economy.”
On whether a recession can exist with 0.5% GDP growth:
“Economies do not hang out at 0.5% or 1%. They do not get this low growth steady state muddle through recession-free kind of growth at 1%, which everybody seems to think might be possible. It is not possible. Free markets have economic cycles. they accelerate and they decelerate. if you are doing it at a very low growth rate, the odds of a slowdown going into recession are very high.”
On whether he’s going to move to London:
“No, I’m not, but the entire West is in the yo-yo years. They have all been having growth stair stepping down. It is very weak growth with higher cycle volatility which will give you more frequent recessions. Did anyone notice that in q4, it’s the G6, Canada did not report. They all contracted? This is after $11 trillion worth of stimulus.”
On how to explain the housing recovery:
“How do we explain it? We called it. We called it back April 2012. We said there was a home price upturn. But that does not preclude a recession. In 2001 you had a home price upturn and we actually had a recession.”
On whether his critics are wrong to strictly associate him with recession:
“I think, no. Look, when we call a recession we will be associated with recession. That is fine. That is what we do. We don’t call the market. We call the business cycle. I think people forget it is not easy to recognize it recession when it is happening.”
On equities going to record highs right now:
“Here’s the thing. In 80% of the last 15 recessions you have had an associated bear market. That is why if you hear the word recession, you say, oh my gosh, we have to run to the hills in the equity market. But in three out of those 15 recessions, we had stock prices rise through the recession. You did not have an associated bear market. That is 1980, a pretty short recession, 1945, coming out of World War II, and 1926-27, which was smack dab in the middle of the Roaring 20s. Avery different economy, a very different market, but to say that stock prices cannot rise during a recession is actually not true.”
On what his weekly indicators say that most indicate the vectors toward recession:
“All the growth rates are coming down in our broad indicators. Look, let’s be clear — the Fed told you they are targeting financial assets as part of their monetary policy. They have specifically called out people’s 401k’s as something that they are looking to target. So, I submit perhaps some of the market prices, as they pertain to economic fundamentals, may be a little wacky, which is why when we look at leading indicators, we do not have all eggs in one basket.”
It is the best leading indicator and what causes stocks to go up or down also causes a lot of other things to happen.
Greenspan: Ignore The Economy, “Only The Stock Market Matters”
By Tyler Durden
Feb 15 —Starting at around 1:50, Greenspan states the odds of sequester occurring are very high – in fact, the playdough-faced ex-Chair-head notes, “I find it very difficult to find a scenario in which [the sequester] doesn’t happen” But when asked how this will affect the economy, Awkward Alan is unusually clearly spoken – “the issue is how does it affect the stock market.”
While not so many of our leaders have taken the path to direct truthiness, Greenspan somewhat shocks a Botox’d and babbling Bartiromo when he admits “the stock market is the key player in the game of economic growth.”
Bartiromo shifts uncomfortably in her seat, strokes her imaginary beard and stares blankly as Greenspan explains that while the sequester will have a real effect on the real economy, “if the stock market can hold up through this, then the effect will be rather minor.”
He ends with a couple of wonderful truthisms – data shows that not only are stock markets a leading indicator of economic activity, they are a major cause of it – 6% of the change in the growth in GDP results from changes in the value of stocks and homes. So there it is – if we didn’t already know, straight from an old horse’s mouth – it’s all about stocks!
Fiscal problems? “The problem is so severe at this stage that unless we come to terms with it in a large way, we are running into very serious trouble,” but Dr. Greenspan, if stocks stay up, it’s all good right? Greenspan’s wealth effect meme is all there is…
