Consumer Metrics Institute is a (relatively) new econometric data and research firm.

What makes them so interesting to me is that they are not economists — they are simply number geeks trying to analyze U.S. consumer data in real-time. The goal is to uncover macro-economic trends by using different data then everyone else.

Rick Davis runs the place. He is a physicist enamored with what numbers say — and he is less than impressed with what the economics profession does:

My real gripes with the established economists are their lack of innovation. The lags and revisions in their data drive me crazy. There are enormous amounts of real-time data available that hardly anyone knows how to analyze. Our current problem is that we are so far ahead of the traditional data sources that hardly anyone takes us seriously.

Here is an example of a recent chart they have produced:

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Source: Consumer Metrics Institute

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Its not all good news: Their daily economic data of the ‘demand’ side of the economy has been shrinking at an annualized rate of over 1.5% during the trailing quarter. They expect this contraction will flow down to the ‘supply’ side of the economy over the next few months, with the lagging GDP shrinking in the second quarter (see this chart).

Category: Consumer Spending, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Will Consumer Demand Falter in Q2 ?”

  1. alfred e says:

    The economic pundits are being paid by the fed to feed the animus. The psychology of the market.
    Blather.

    Why not just dissect a pigeon on the pagan altar and declare the recession over and things rosy?

    They don’t want to go looking for the truth. “You couldn’t handle the truth”. Famous line. More importantly your benefactors don’t want you spouting the truth.

    Jobs and tanked home equity. Next question.

  2. wunsacon says:

    Alright, Barr. Hire me to integrate that data feed into FusionIQ.

    (Oh, dang, I’d have to move offshore to get that work, huh?? Pfthfthfth…) ;-)

  3. dead hobo says:

    BR pondered:

    Will Consumer Demand Falter in Q2 ?

    reply:
    ————-
    It already has and the numbers will show up later in the statistics. My periodic shopping trips have illustrated empty parking lots and empty stores. On a weekend I got a row 1 parking spot in a WalMart that had a substantially empty parking lot. I saw a mostly empty parking lot at a major appliance / TV / Furniture store that would have has well over 2x as many cars a couple of years ago. They had a great promotion going on, too. Went to an empty KMart having a close out due to store closing. Lots of merch, no customers. Pundit-speak of a consumer comeback is sales hype. Retail is shriveling. Too soon to say a double dip is coming, but things are looking like it is very possible.

  4. dead hobo says:

    RE employment; sources tell me that demand for summer help is mostly non existent with many companies that hire seasonally. Temps are replacing perms and few offers for temp to perm are coming. No recovery in sight at this time, just more of the same only at a slower rate than before.

  5. Mr.E. says:

    It appears they MAY have an impressive leading indicator in their growth index. It certainly bears following, and I hope we get to see updates here at TBP as they become available.

  6. [...] Barry Ritholtz, on the other hand, draws attention to a real-time index of consumer demand by Consumer Metrics Institute which shows that although demand has been falling since October, it may have started to rebound. [...]

  7. willid3 says:

    not really surprised about lack of demand. as almost all the states that a sales tax are reporting lower reciepts. and from my rare excursions in stores I am thinking demand has really tanked and still hasn’t come back. and thats here in Texas. where we think its rosy. not

  8. crunched says:

    The market goes down, but the index ETF’s go up. Interesting.

  9. bondjel says:

    Thanks for bringing this to our attention, a very interesting site.

  10. “There are enormous amounts of real-time data available that hardly anyone knows how to analyze.”

    Davis couldn’t be more accurate.

    “The lags and revisions in their data drive me crazy.”

    That that type of thing–’Economists’ using data so old that they should be scraping off the Mold–is the “State-of-the-Art” leads to: “They don’t want to go looking for the truth. “You couldn’t handle the truth”. Famous line. More importantly your benefactors don’t want you spouting the truth.”–alfred e, above..

    It’s broken, on Purpose.

  11. torrie-amos says:

    0% interest rates on auto’s for five years, that is what they need to move product, imho, this portends to the exact same problems airlines have had this last decade from 1980 too 9-11 leisure travel was cheap thus anything over 250 for a round trip tick anywhere in the us of a stood until 2005, it’s now up too 400 bucks along with a dozen extra fee’s for this or that, that is the max they can charge and what the mkt will handle, thus, it’s now onto biz travelers who will also reign it in somewhat

    now, we have all car buyers payment bound, similar to homes, u will not buy if your new payment will be higher so rates have too stay low

    folks who have jobs have done a round of cuts and have returned to restaurants and some much needed clothes buying, while others are still even more paycheck to paycheck than in the past, the retail sales receipts tell the facts

  12. constantnormal says:

    I really, really, REALLY dislike the practice of slicing up a continuum of data relationships, and folding it in upon itself in (seemingly) arbitrary segments. At least when they do not also present alongside it the whole picture — in this case the “daily-annualized-trailing-quarter-contraction-rate”.

    This practice may be viewed as an attempt to pick-and-chose the data to fit the theory or model, which pretty much makes them “economists”.

    It would appear that these growth index lines are started from when the GDP growth goes negative, according to their “daily trailing quarter” plotting of the data. So this is a daily view of quarterly variation. How does the chart change is we instead use monthly or weekly changes in the GDP? What makes a quarterly view more preferable to any other interval? And how to they get daily values for changes in the GDP in the first place?

    Har-rumph.

  13. HarryWanger says:

    I like the Philly ADS myself. What do you see in this graphic?

    http://www.phil.frb.org/research-and-data/real-time-center/business-conditions-index/

  14. hgordon says:

    +1 what constantnormal says

    For what it’s worth, in my small corner of the world, I have watched lead times on electronics components continue to lengthen, further reflected in a 19.8% year-over-year improvement in SEMI’s book-to-bill ratio (Jan ’09 to Jan ’10), so it feels like we’ve moved from “inventory restocking” to a secular growth trend. In general, the improvement in industrial production numbers across other industry segments seem to be real, and longer term, that turns into revenue which turns into jobs, though at what growth rate and levels, I wouldn’t hazard to guess.

  15. destor23 says:

    Yes but are the mainstream economists really wrong here? I mean… they think GDP growth will slow later in the year as well. This seems to jive with that.

  16. Chris says:

    If there is anybody I trust less than an economist of getting a description of reality right it would be a physicist. ;) I used to work in bioinformatics, a field a lot of physicists entered. In short – most of them had no understanding of biology and no interest in learning it. Sound theoretical models, but quite often completely failed to describe reality. Ok, to be fair they brought some interesting techniques to the field (HMM, neurol networks, support vector machines), but in generally I wasn’t impressed.

  17. farmera1 says:

    Hum, a ton of quants, the people that cooked up a lot of the creative derivatives products were physicists (along with mathematicians). Now a lot of them have moved over into high speed/flash trading. They can be very strange and funny people. Probably as a group no better or worse than economists. Just smart in a different sort of way.

    PS: I have a physicist for a son, working at CERN.

  18. constantnormal says:

    I like charts like this one:

    http://link.businessinsider.com/view/bmt.x7/cafced6d

    Nice, long expanses of time, where one can easily see the interplay of various trends. In particular, what I see in this one is that as our “machinery” becomes smarter and smarter, we need fewer and fewer people to tend to it.

    And please don’t give me that tired old nonsense about “service” jobs picking up the slack. Once you fold in the increase in population, and combine it with the lessening of a need for manufacturing workers (or farmers, to take another slice at it), the only way that service jobs are going to fill the void is if we have a mess of incompetent clueless fools who are interfering with each other to get the work done. And fer sure we don’t want THAT!

    This is why I view the need to deal with the global climate change as a blessing in disguise — here we have a task that does not require consumers to purchase everything under the sun to generate economic activity, that will generate lots of new manufacturing jobs with a heavy dose of manual installation/monitoring/repair (at least until we understand what’s needed and can properly automate it).

    Terra-forming this planet is a big job demanding lots of work (it’s too late to cut back on greenhouse gases, the process is on its own now, with methane from all sorts of places smothering any puny successes in CO2 reduction we might achieve, we need to be working on actively removing greenhouse gases via atmospheric conditioning plants on a ginormous scale).

    There is a problem of wealth transfer and valuations — how much is it worth to prevent increasingly severe winter weather in the Northeast? And who pays for that? However, I am confident that when the problems begin to appear annually in increasing severity, something will be worked out.

    I was going to stick in here a mini-rant about a decent automated national health database, with protections for the individual and yet access by all the health care providers who actually need the individual data (insurance companies only need aggregate data to devise accurate risk models, they only need individual data for raping and pillaging) — but I decided not to bring discussions of politics or religion into this fine liquor establishment. Global climate change seemed a safer target for our national efforts.

  19. constantnormal says:

    @HarryWanger 4:26 pm

    “What do you see in this graphic?”

    Pretty much the same thing that is described here …

    http://www.calculatedriskblog.com/2010/03/nfib-small-business-optimism-declines.html

    or here (to give credit to this item’s subject)

    http://www.consumerindexes.com/commentary_2010_dailygrowthindexvsgdp.gif

    (assuming you can parse the ugly chart — it hurts my brain to do so)

    Recovery stuttering, (perhaps) nearing stall speed. Stall klaxons blaring …

    “More power!” the Captain cried out to Chief Engineer Bernanke …

    “She’s already at 110%!” Bernanke yelled back. “She kinna take much more of this, the dilithium crystals are beginning to crack!”

  20. cognos says:

    +1 constantnormal
    +1 hgordon

    The companies I follow (and main major blue chips I dont) seem to have had a stronger than expected Q1 already. Underlying trends look like continued growth.

    This chart posted is classic in 2 ways. First, it looks like he captured the year-opening seasonality? Or something else very simple. Second, its a classic when the Physics Phd presents his over-simplified chart with NO LABELS. Seen that a few times. Ha.

  21. rootless_cosmopolitan says:

    cognos,

    Referring to the other thread, what would be the outcome that will prove your expectations about the most likely outcome in the economy wrong? Let’s say, if the economy falls back into recession at some point in the 2nd half of 2010 or in 2011 you will be proven wrong. I will be proven wrong with respect to my expectations, if the rate of expansion of private credit goes back to about the rate of before the recession, or economic growth accelerates in the 2nd half of 2010 and in 2011 (with or w/o credit expansion resuming). Could you agree to this?

    rc

  22. [...] Conditions Index may be near highs, but the ECRI index has turned decisively lower. Further, the Consumer Metrics Institute real time daily economic data of the ‘demand’ side of the economy has been shrinking at an annualized rate of over 1.5% [...]