Bloomberg notes that U.K. Retail Sales Plunge at Fastest Annual Pace in Eight Years . The story caught my eye and was not unexpected.
The Confederation of British Industry said its measure of sales plunged to minus 36 in October — the lowest since March 2009 — from a positive 42 in September. Faster inflation has put the squeeze on shoppers this year, and a separate report on Thursday suggests a cooling housing market could further dampen consumers’ enthusiasm for spending. YouGov and the Centre for Economics and Business Research said while their headline sentiment measure rose this month, confidence in the housing market weakened. “The downtick in the house value measures is a concern,” said Nina Skero, head of macroeconomics at the CEBR. “One’s perception of own home value has direct implications on their future willingness to spend.”
How Economic Illiterates Think
Nina Skero, head of macroeconomics at the CEBR, provides a perfect example of economic illiteracy. The concern should not be that home prices are falling in the UK. The concern should be they got as high as they did in the first place.
Mike “Mish” Shedlock
People have no money. The government steals it all in taxes. The parasitism must end. Let people keep their earnings. \
Debt growth is not economic growth. The neo-keynesians were pulling a con job from the beginning. There is no free lunch, and like all the other “free” sh!t the socialists promise, the eventual bill for “free” sh!t will be many multiples of what it would have cost to buy honestly.
UK RE is down for the same reason it will plummet in New Zealand – ignorant, self serving politicians have banned foreign investment in RE. Of course, you also have those same politicians raising taxes that scare potential buyer away. The majority of high end sales are cash buyers looking for a safe place to park money. Broke govts going after property owners is just another source for stocks, which are liquid and moveable.
UK credit impulse has fallen 4.6%, hence the sharp slowdown. By the way Realist, China’s credit impulse is down 14%. The cracks are fairly obvious and growing wider.
or, is Brexit having an effect on the British economy? Britain is in a unique place in the world economy at the moment, and has it’s own issues, so problems in Britain may not translate to the rest of the world.
Same thing happening in U.S. – Record number of store closings this year – beating out 2008. They are trying to blame it on internet sales, but the real reason is people don’t have money to spend like they used to. People are not getting those generous 3% raises I keep hearing about.Cost of living continues to go up and people simply do not have the money left over after paying rent, utilities, food, etc. I have noticed an uptick in “package size shrinkage” over the last year. Just bought some Pantene shampoo – 38.2 ounces vs. the 40 oz it was the last time I bought it.
“The concern should not be that home prices are falling in the UK. The concern should be they got as high as they did in the first place.” The quite common argument is that interest rates cannot go up because of the mountain of debt. This is a fine example of circular logic.
Cracks in the global economy? Please tell.
Cold feet over brexit maybe?
I have been through two recession/stock price crashes as a working adult investor, 2000 and 2008. I was in college and not investing during the 1990/1991 recession. IMO there is no question there are way more cautious/bearish people today vs. say 1999 and 2006 before the last two crashes. I have a hard time thinking of anyone right now who is bullish. Every podcast, blog, etc… I read is cautious or outright bearish. So many famous pundits, hedge fund managers, etc… are sounding the alarm bell, returning money to investors, etc… And they have been for years. This was NOT the case in 1999 and 2006! There was far more unchecked euphoria then. Were there bears back then? Sure, but a lot less. If we get a big crash or big recession say in the next year or so, this will be the most predicted crash in the history of the world!! And this will be the most hated run up in stocks and real estate at least in my memory.
Some e en voted Brexit to bring down house price, not joking.
seen as an economy breathing in out but as a cataclysm.No longer seen
What is surprises is how we have all become more sensitive to it.
Add cycality. Wealth multiplier effect will go into reverse. Happens every few years.
Carney bottomed out interest rates last year and people maxed out on credit.
London housing in places seen as a diversification for the wealthy so substantial investment in rental by various nationalities.
Substantial foreign money. Excess borrowing.
Not enough Muslim immigrants coming in.