Retail sales were down in July. And that was with Cash for Clunkers in full force. The headlines said that economists were shocked. Really? Consumers are saving more and actually paying down credit-card and bank debt. I’ll go into those details more next week.
Why am I doubtful of a sudden overall sense of prudence overcoming the American public? Consumers are saving more: how much more? If your typical consumer wasn't saving anything last month, but is funneling thirty dollars into his savings account this month, then this is technically a %100 percent increase in personal savings. Sounds good as a stat on paper I guess. Worse, if he was in the negative 10% last month, but only 5% this month, could that not also be reported as an amelioration in personal savings, and reason to rejoice?Are we grabbing at anything?
I also suspect that some of this increased savings is at least due in part to underwater homeowners who are socking away their monthly mortgage payments before they're frogmarched to the curb by the bank. As for a reduction of credit card debt/bank debt, I'm thinking there's a sizable percentage of folks wagering to get their balances cut in half, or simply not paying on the cards at all. In any event, I'm skeptical that there's some kinda radical new trend toward thrift sweeping the nation. For what it's worth, I see business as usual at street level. Any thoughts on what the real deal is?
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This, from Minyanville via Patrick.net:
Why am I doubtful of a sudden overall sense of prudence overcoming the American public? Consumers are saving more: how much more? If your typical consumer wasn't saving anything last month, but is funneling thirty dollars into his savings account this month, then this is technically a %100 percent increase in personal savings. Sounds good as a stat on paper I guess. Worse, if he was in the negative 10% last month, but only 5% this month, could that not also be reported as an amelioration in personal savings, and reason to rejoice?Are we grabbing at anything?
I also suspect that some of this increased savings is at least due in part to underwater homeowners who are socking away their monthly mortgage payments before they're frogmarched to the curb by the bank. As for a reduction of credit card debt/bank debt, I'm thinking there's a sizable percentage of folks wagering to get their balances cut in half, or simply not paying on the cards at all. In any event, I'm skeptical that there's some kinda radical new trend toward thrift sweeping the nation. For what it's worth, I see business as usual at street level. Any thoughts on what the real deal is?
#housing