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.

Economic Charts

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.













 navigate econintersect.com

Blogs

Analysis Blog
Econintersect Features
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Live Market Commentary
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
Live Market Conditions
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2015 Econintersect LLC - all rights reserved