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As Fed Blows Bubbles, US Consumers Fall Further Behind, Where’s the Trickle, Ben?

March 19th, 2013
in Op Ed

by Lee Adler, Wall Street Examiner

Wall Street pundits are only concerned with how top line retail sales did this month. In reality, they’re looking at inflation and the spending of the  top 10%, not growth in the volume of sales, and not broader growth in real retail demand. With the CPI data posted today we can drill down and see how the average US consumer is doing. It looks as though he or she isn’t doing too well. The majority are buying less, not more. The idea of the “resilient US consumer” is a myth. Only the top 10% or so is resilient. The rest are running in place or losing ground.

Follow up:

Click to enlarge

Real Retail Sales Ex Gasoline Per Capita for February 2013 totaled $596.98 in 1982 constant dollars. That was 1.7% below the year ago level. That was the second year to year decline in 3 months. December was down by 0.7%.  January had an increase of 4%. One decline could be an anomaly, but twice in 3 months we need to begin to worry.  On a rolling 3 month basis, the last 3 months are only 0.4% ahead of the same period a year ago, and with 2 declines in 3 months, we have to wonder if even a near zero growth rate is sustainable.

This month’s decline in per capita spending was  more than double the 0.7% decline in total real retail sales ex gas. Apparently the majority of Americans are losing ground faster than the top few percent is gaining. Where’s the trickle down Dr. Bernanke?

The February number now stands 6.1% above the level of 3 years ago, which was the absolute bottom for this figure coming out of the recession. So there’s been some recovery. However per capita spending on everything but gas is still 5.2% below the peak February level in 2006 at the top of the bubble.  It is just 1% above the level of February 2003, coming out of that recession.  Even though there has been some recovery since 2010,  most Americans have lost purchasing power over the past decade. The economy is technically growing but leaving most Americans falling behind.

Looking at this chart and considering this data, ask yourself how the Fed’s money printing, which is probably fomenting more disastrous bubbles right now, is going to help more Americans get good paying jobs that will enable them to halt the long term slide in their standard of living.  The last bubble did not do that. In fact, it made things worse for most Americans. Only the speculators and crooks at the heart of the easy money driven Ponzi scheme did better. Everyone else simply tread water through the bubble. When it collapsed, they did worse. And they have not caught up during the recovery phase.

Meanwhile surging gasoline prices are cutting into consumers’ discretionary spending on other things. The Fed wants credit for rising stock prices and housing prices, but will accept no responsibility for the rise in energy prices that is crushing most middle class consumers.

Why would the Fed expect the effects of the the bubbles it is blowing now to be any different than in the past? This is one definition of insanity.

This report is excerpted from the permanent charts page on Real Retail Sales.

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