Results 1 to 17 of 17

Thread: "We Do Not Have An Explanation" - Home Improvement, Luxury Spending Unexpectedly Plunges

  1. #1

    "We Do Not Have An Explanation" - Home Improvement, Luxury Spending Unexpectedly Plunges

    http://www.zerohedge.com/news/2016-0...ctedly-crashes

    by Tyler Durden - Jun 10, 2016

    One of the main reasons for marcoeconomic optimism heading into last Friday's abysmal jobs report, is that the seasonally-adjusted April retail spending report came far stronger than expected, even as CEOs and CFOs of actual retailers have and continue to lament a dismal consumer spending picture (and as a result have continued to slash guidance). Indeed, the payrolls report confirmed that much if not all of the April retail sales rebound was due to seasonals and other "opportunistic" upward adjustments. Of course, after the May payrolls, all optimism promptly evaporated, and for a brief period "bad news became good news" as suddenly the Fed was seen as being on hold - again - indefinitely.

    And with the Fed suddenly poised precariously between being the need to hike (so it can ease again shortly thereafter), and having to cut right now, a decision that could be finalized as soon as the June payrolls are reported in three weeks, the most important data point between now and then will again be the retail sales report, this time for May. It will be reported on June 14.

    However, in advance of the official government data, courtesy of Bank of America we have the always informative monthly aggregated credit and debit card spending report, which traditionally gives an early look into consumer spending trends. What it reveals is that, not surprisingly, "the BAC aggregated card data decelerated more than the Census Bureau data at the turn of the year, when measured as retail sales ex-autos and gasoline." But while in recent months there has been a modest pickup at the headline level, if weaker when one excludes gasoline sales which are higher due to rising gase prices, the picture is far less pleasant if broken down by retail sales by high vs low-income consumers. In this case, the slowdown clearly continues for both groups of consumers, something which spells far more pain for not only GDP but for corporate profits as well as employment.

    As BofA adds, "for the first time since the recovery, sales among the high and low end consumer cohort are growing at roughly the same pace (2.1% yoy). During the first four years of the recovery, the high end consumer outperformed, which reversed starting in 2014." We leave it up to readers if the chart below can be spun as "good":



    However, what caught our attention is not so much the aggregate spending data, as the detail for what are arguably its two most important constituent components: luxury retailer sales, a proxy for the wealthy consumer, the one whose generosity was so instrument in the early years of Obama's "recovery", as well as spending on home improvements and related stores, a direct proxy for home purchasing and renovation, the single biggest component of US GDP, and thus, consumer spending.

    It is here that something unexpected is happening.

    First, when it comes to luxury retailer spending, BofA had this to say:

    • There has been a decisive slowing in spending on BAC cards at luxury retailers, which we define as high end designer retailers, exclusive of department stores.
    • This slowing has occurred over the past several years after the exceptionally strong growth during the early stages of the recovery.
    • However, the trend took a turn for the worse at the end of last year with the past four months looking particularly dire. In our view, this may have been a function of the poor market performance in January and February




    To say that this is a very ugly harbinger of future retail sales, is an understatement.

    But what was even more disturbing is what BofA found took place in spending on home improvement stores: spending which traditionally is directly correlated to new home purchases and construction. Instead of stealing BofA's thunder, this is what it said:

    • The BAC composite for home improvement stores tumbled in May, falling 4.6% mom SA, which pulled down the year-over-year growth rate.
    • However, the BAC home improvement series has been running below the Census Bureau aggregate, suggesting the recent weakness may be overstated by the BAC data.




    BofA's punchline:

    "We do not have an explanation for this divergence, but given the high correlation between the two series historically, we would expect our data and the Census Bureau figures to converge over time."
    They sure will, but not to the government's seasonally-adjusted, politically biased, constantly massaged data. And when they do, yet another of the dominos in the fake narrative of "US recovery" lies will topple.



  2. Remove this section of ads by registering.
  3. #2


    Building materials are used in new construction usually. Home improvement is for fixing up the interiors and exteriors of the homes. Rising home construction usually means more home sales and more home improvement purchases in the future.

    http://www.usatoday.com/story/money/...tate/84848598/

    New-home sales jump to highest level in 8 years as median price surges
    Christopher S. Rugaber, The Associated Press

    WASHINGTON - Americans ramped up their purchases of new homes in April to the highest level since January 2008, evidence of a strong start to the spring buying season.

    The Commerce Department said Tuesday that new home sales jumped 16.6% last month to a seasonally adjusted rate of 619,000, up from a revised total of 531,000 in March.

    Steady job gains and low mortgage rates have encouraged more Americans to buy new homes. That trend is driving home construction and helping support the economy.

    The new home sales figures are notoriously volatile, particularly at the regional level. Last month, new home purchases leapt 53% in the Northeast and 19% in the West. They fell 5% in the Midwest and jumped 16% in the South.

    The housing market is still healing from the long-term consequences of the bubble and bust a decade ago. Last month’s sales aren’t far from the historical long-run pace of about 650,000 a year.

    Developers have been disproportionately targeting higher-income buyers: The median price of a new home that sold in April was $321,100, a record high, up from $297,900 in March.

    Those sharp price gains will likely put many new homes out of reach for some buyers, particularly younger first-time purchasers.

    Still, more building is expanding the supply of homes available for sale, which could help relieve some pricing pressure. The number of new homes for sale is 17.4% more than a year earlier. That could help offset a shortage of existing homes for sale, which have fallen 3.6% in the past year.

    The housing market is showing signs of picking up after a weak start to the year, though growth remains modest. Lower mortgage rates are helping: The average 30-year fixed rate mortgage was just 3.58% last week, according to mortgage buyer Freddie Mac.

    Sales of existing homes, which make up 90% of the housing market, rose in April for a second straight month to an annual pace of 5.45 million, a figure consistent with a solid economy.

    And the construction of new homes rose 6.6% in April to an annual rate of 1.17 million houses and apartments. That mostly reversed a steep drop in March. Builders are breaking ground for new homes at a faster pace than they did last year.
    Last edited by Zippyjuan; 06-12-2016 at 04:38 PM.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  4. #3
    @Zippyjuan - is there anything in the economic front that you dont downplay?
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  5. #4
    Life does not always suck. Most here only post the bad things. Why not some of the rest of the story?
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  6. #5
    Because the MSM doesn't need help putting lipstick on the pig?

    Because when you do things like denying that gold can be money by trying to paint a gold standard as some kind of price fixing, for example, you aren't being a cheerful Little Miss Sunshine, you're propagandizing?

  7. #6
    How was the economy under a gold standard? Remember the Great Depression happened under one. Is it a "miracle cure-all"? Was life easier than today? Were people wealthier? Was everything cheap and everybody working at high paying jobs?
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  8. #7
    Quote Originally Posted by Zippyjuan View Post
    How was the economy under a gold standard? Remember the Great Depression happened under one. Is it a "miracle cure-all"? Was life easier than today? Were people wealthier? Was everything cheap and everybody working at high paying jobs?
    Why are you hijacking this thread? Shall I dig up one of the many threads where you were schooled on the subject before? Or have they hired yet another Zippy (.5.0? 12.0? 37.0?) and you never looked at " your" own post history to see what " you" were taught in the past?

  9. #8
    Sorry, you changed the subject. How about those housing starts?
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.



  10. Remove this section of ads by registering.
  11. #9
    Quote Originally Posted by Zippyjuan View Post
    Life does not always suck. Most here only post the bad things. Why not some of the rest of the story?
    You were a Paul Harvey guy, weren't you?
    "He's talkin' to his gut like it's a person!!" -me
    "dumpster diving isn't professional." - angelatc


    "Each of us must choose which course of action we should take: education, conventional political action, or even peaceful civil disobedience to bring about necessary changes. But let it not be said that we did nothing." - Ron Paul

    "Paul said "the wave of the future" is a coalition of anti-authoritarian progressive Democrats and libertarian Republicans in Congress opposed to domestic surveillance, opposed to starting new wars and in favor of ending the so-called War on Drugs."

  12. #10
    Quote Originally Posted by Zippyjuan View Post
    How was the economy under a gold standard?
    It grew faster than at any time in US history.

    Remember the Great Depression happened under one.
    The depression of 1929 occurred after and because of a decade of massive money printing by the newly created Fed.

    It lingered and became the Great Depression because of Roosevelt's socialistic economic policies.

    It ended only because of the abandonment of those policies (many of them, some sadly remain) at the end of WWII.

    Were people wealthier?
    Of course not, as growth has continued since it ended, though at a much slower pace.

    But the rate at which they were becoming wealthier was greater than today.

    Was everything cheap and everybody working at high paying jobs?
    Throughout the 19th century, prices fell dramatically as wages increased.

    Real wages for unskilled labor increased by ~700%.
    Last edited by r3volution 3.0; 06-12-2016 at 08:55 PM.
    "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

    -H. L. Mencken

  13. #11
    Quote Originally Posted by Zippyjuan View Post
    How was the economy under a gold standard? Remember the Great Depression happened under one. Is it a "miracle cure-all"? Was life easier than today? Were people wealthier? Was everything cheap and everybody working at high paying jobs?
    Openly Straight Man Danke Awarded Top Rated Influencer

    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  14. #12
    Gold makes me feel better , FRN's do not .

  15. #13
    Quote Originally Posted by Zippyjuan View Post
    Sorry, you changed the subject. How about those housing starts?
    Housing starts are just getting back to 1992 recession levels, but mostly include the new spate of prison complex-type apartment complexes.

    I've been in the residential building business since 1975. The myriad of new code regulations that appear yearly are driven by the insurance companies, the NRC is now the IRC (was National, is now International), dictated by a faceless, nameless board somewhere in The Hague, the "smart" grid is watching you, adding cost of living and adding fire and health hazard and housing quality has steadily declined over that period of time.

    Put away the MSM Google button and pom-poms, will ya?

  16. #14
    Quote Originally Posted by Zippyjuan View Post
    G]Building materials are used in new construction usually. Home improvement is for fixing up the interiors and exteriors of the homes. Rising home construction usually means more home sales and more home improvement purchases in the future.
    People who are in homes now need to make home improvements, too, Zipster. At some point we will want to sell our very small home and move to a place where there won't be so much yard work for my husband. In the meantime we have to make improvements and repairs to keep the place livable and eventually sellable. With so much money confiscated to support nonworking people in their new homes, and government in its ever-expanding offices, we have very little money to do the things we want to do to enjoy our house. We are not looking at high-end improvements because the house and neighborhood do not really support that kind of investment. We would like to do something in the kitchen, add at least a half bath, and do some necessary repairs to the structure.

    I'm not sure how old you are, where you live, or what you own, but you are either very young and naive, older and financially comfortable, or you don't own anything. You really don't post from a perspective of people who work for a wage or own property. All your little charts and whatnot do not speak to anything close to a normal, working, American experience.
    “When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it”~~ Frederic Bastiat

  17. #15
    Quote Originally Posted by euphemia View Post
    People who are in homes now need to make home improvements, too, Zipster. At some point we will want to sell our very small home and move to a place where there won't be so much yard work for my husband. In the meantime we have to make improvements and repairs to keep the place livable and eventually sellable. With so much money confiscated to support nonworking people in their new homes, and government in its ever-expanding offices, we have very little money to do the things we want to do to enjoy our house. We are not looking at high-end improvements because the house and neighborhood do not really support that kind of investment. We would like to do something in the kitchen, add at least a half bath, and do some necessary repairs to the structure.

    I'm not sure how old you are, where you live, or what you own, but you are either very young and naive, older and financially comfortable, or you don't own anything. You really don't post from a perspective of people who work for a wage or own property. All your little charts and whatnot do not speak to anything close to a normal, working, American experience.
    Zip is UnAmerican , he does not even own a car . He is over 40 and his house is pd for.

  18. #16
    Actually, I guess fiat money is not that much of a threadjack. The reason so much of the middle class is becoming the poor is because the dollar becomes more worthless every single day, while the middle class generally fails to get a raise every single day. Which certainly explains fewer new homes being built and fewer home improvements being made.

    A rising tide floats all boats. And a shrinking currency creates a permanent ebb tide. That doesn't bother 'the one percent', but it sure doesn't do a single good thing for everyone else.
    Quote Originally Posted by UWDude View Post
    We could pay off the debt with the money raised from live broadcast executions.

    Be just like 1984. Truckloads of em, people betting on which one gets shot first, all sorts of fun stuff
    Quote Originally Posted by Swordsmyth View Post
    I don't really care if I happen to be wrong about your positions, you are wrong about mine.
    A POX ON BOTH YOUR PARTIES



  19. Remove this section of ads by registering.
  20. #17



Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •