Percent Change From Previous Month
Negative Surprise
The Advance Retail and Food Services report surprised to the downside today vs Econoday Consensus Expectations.
Totals were about 30-40% under projections and that is on top of huge negative revisions for July.
The “control group” projections were not even in the ballpark at -0.2% vs expectations of a 0.5% bounce.
The control group is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials.
What Happened?
On July 25, Pandemic assistance checks of $600 per week ran out.
About 30 million people were collecting checks.
30 million * $600 per week * 5 weeks =
$90 billion.
Some of those people went back to work, but many of them didn’t.
When I looked at the projections last night I thought they were off.
The Cliff
Some thinking individuals saved some of their pandemic checks, and some others went back to work.
The rest faced the cliff. September rates to be worse.
Mish
Missed compared to what ? Literally everything is unpredictable under Trump. Businesses can’t have this level of uncertainty in order to make accurate forecasts and operations.
The expiration of PPP is more of a cliff than the $600/week “stimulus” check. Raytheon Technologies this week announced it is letting go nearly DOUBLE of what they estimated in a July announcement for their Pratt-Whitney and Collins commercial aerospace divisions. This amounts to a 17-20% reduction in headcount. In addition to 15000 positions, local machine shops are feeling the shock waves as orders shrink or get cancelled. This is a big hit to Connecticut.
Good point. I still haven’t spent all my PPP, but we haven’t brought everyone back either. It will make a big difference to our mom and pop show when it runs out.
Winter is coming.
$90 Billion spent wisely and a few trillion to the cronies….seems about par for the course. It just goes to show how much good a stimulus can do when it goes to the right place….it not only did a lot for working stiffs to prevent a complete collapse….it took some pressure off mom and pop employers, who are normally on the hook for half of unemployment, at least in my state.
But it stopped too soon, and the Republicans are singing the austerity song again….so we have a cliff to fall off of before they come to their senses….with elections looming, I look for money give-aways to get way more popular.
The payroll tax deferment is going to be a disaster. Where do they think the money is going to come from for people who have never had to put back a dime to pay taxes before in their lives….to catch up?
The only ones who have payroll tax deferment is Fed employees because the administration is forcing it. No business in their right mind would do it because they could be on the hook if the employee quits.
Good to know. I thought it was mandatory. I’m pretty sure ADP decided (without consulting me) to NOT deduct the employee portion of payroll taxes on my last payroll. I need to check on that immediately.
ADP sucks. Full stop.
So, I go over to CNBC and see this:
Options traders see Walmart+ leading to huge gains for the retail giant
“We saw calls outpace puts by more than 11-to-1. One of the examples of activity that we saw were the Sept. 25 weekly 148-strike calls. Those are the calls that are going to expire a week from this coming Friday. One of the buyers of those paid a little over 70 cents for about 1,000 of those,” Optimize Advisors CIO Michael Khouw said Tuesday on CNBC’s “Fast Money.”
We will see. If the Trump depression gets any worse or god forbid he found a way to not go to prison in January I can see WalMart going the way of KMart instead of trying to become the next Amazon. Which they deny. I know I rearely even go to the WalMart near my house anymore, it is dirty, small, poorly lit, badly stocked, lots of empty shelves, they are putting NOTHING into maintaining the place, so I am thinking they have it slated for closure.
Around here it is the Newsom depression, his having shut down and being so slow to fully open up the economy again. The local Walmart is practically brand new and well stocked. Busy, too. Finally went for the first time in nearly 6 months, at 7am Sunday morning. The other times i had driven by, there was a line waiting to get in.
Mish,
I think you’re right. The $600/mo bonus explains everything.
Yes, the 20 somethings in the party house across the street and a few doors down had all hours parties the whole time they were doling out that $600, and the week after it ended there were no more parties, then last week the house was vacant and a Remax sign sprouted in the yard. Pretty sure they were not making the payments and had to sell, and they listed it for $260k. It is comparable to my house in most ways, pool, great lanai, stone counters, 3/2/2 with laundry, etc. but I paid $257k and my house is nearly twice the size. Theirs is 1,880 sq.ft. mine is nearly 3,500. Will be interesting to see what they get for it. Very possibly dodging creditors, maybe not paying on the truck/car which were both pretty new.
Mish, even when they do get some money coming in be it from work or whatever, they are so behind on car payments, rent, mortgages, they can’t just head to the mall or WhaleMart to spend spend spend! That is where the next stimulus check will go to as well if they ever pass it. I can’t see Moscow Mitch allowing that but there is fresh hope they have reached an agreement. After the way Nancy Pelosi criticized him and his emaciated support bill he may be in too much of a snit to care if people starve or go homeless.
A lot of people were making more on unemployment than having a job. Many were spending the surplus instead of saving.
Must be, with something like 40% of all renters in arrears on back rents, 9% of mortgages not making payments, auto loans going belly up at the highest rate in decades, higher even than in the GFC. For so many even if we did get another stimulus of $1,200 it will be too little too late. Oh well, as long as Wall Street is so hot the wheels are smoking I guess all is well right?
I would say that Wall Street clearly believes everything is fine, and that no additional stimulus is needed. As long as they do, I think we could be crazy to spend another 2.5 trillion dollars that we don’t have. Until such time as the economy actually shows some symptoms of having problems, I would strongly oppose additional stimulus.
If a few zombie corporations go out of business, that’s a good thing, and will ultimately mean a stronger recovery. If a few consumers find that there is indeed value in saving for a rainy day instead of piling on debt at every opportunity, that’s a good thing as well. Our economy was very strong, and our recovery was very strong, from WWII until the 70s, and it wasn’t built on the backs of private and business debt.
Indeed they were. And now they are in a heap trouble and hurt. I feel for all of them.