Report card day for the US consumer
Over the past few weeks we’ve seen a differentiation developing in the stock market with outperformance of those name’s that are exposed to growing inflation expectations and those co’s that have large exposure to overseas markets relative to those co’s that are US centric only, dependent on the US consumer and with little pricing power. The reason is clear as the US struggles with economic growth relative to the rest of the world due the anchor of enormous debt. Today we’ll get info on all the factors that will be a cloud, in my opinion, over the US economy for a continued period of time, consumer spending, the labor market and the balance sheet of the consumer. Retail Sales, Jobless Claims and the Fed’s Q1 flow of funds are all out. As of Q4 ‘08, household debt as a % of disposable income was 123% up from 96% in ‘01 and 83% in ‘95. The Treasury today goes back to the well with a 30 yr auction and with inflation expectations at a 9 month high.
June 11th, 2009 at 7:41 am
Let the U.S. take the example of Polish, stable economy, for the favor of the investors and all ok!
June 11th, 2009 at 9:58 am
Has the debt anchor theory ever been empirically proven, or is it merely a “feeling?” I know that almost everyone believes in it.
Well, everyone is usually wrong. Show me the numbers.
June 11th, 2009 at 11:57 am
Report Card would be Graded with an F just on the basis of what each household owes to pay off all the government spending then add to that the debt.
http://business.theatlantic.com/2009/05/us_debt_668621_per_household.php
No that’s not a typo: that’s the statistic according to USA Today. The folks over there have done some really great work this week with another interesting interactive chart attached to an article about the nation’s debt. If they keep this up, I’ll have to stop considering it a useless free newspaper I step over when leaving a hotel room. The numbers it reports are staggering.
Again, I wish I could include the interactive chart it shows, but it breaks down the $668,621 by various components of federal government debt ($546,668) and personal debt ($121,953). Presumably that means this astronomical figure does not even include state and local government debt. I thought it might be fun to put this number into perspective.
THEN NEXT UNFUNDED LIABILITIES
http://www.ncpa.org/sub/dpd/index.php?Article_ID=18076
The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today’s dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt, says Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis.
The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both, says Villarreal.
America and Americans are broke and even the Fed is Dead
http://bluelori.blogspot.com/2009/06/fed-is-dead.html
obama 08-depression 09 no longer just a bumper sticker!
June 16th, 2009 at 9:50 pm
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