News Beyond the News: Consumer Data Not as Rosy as Advertised

Every week, various government agencies trot out economic facts and figures, and every week, the media breathlessly reports the “good news.” Here is some of the news beyond the news reported by the mainstream media over the last week.

As USA Today reported, consumer spending and personal income rose last month. But while Commerce Department numbers show healthy gains in consumer spending (0.4% in August), a Gallup poll asking actual people about their spending indicates a continual decline. According to the poll, daily spending averaged just $89 in August, down from the same time period in both 2014 and 2013. It was the fourth month in a row the poll indicated a year-on-year decline. Spending was at its lowest since March, based on the poll.

As for the personal income growth of 0.3%, it was the lowest increase since March, when it tanked. As we reported earlier this month, household incomes are also losing ground.

ZeroHedge points out that even the modest growth in spending spun as good news isn’t necessarily so great:

At the same time spending rose 0.4% MoM, slightly more than expected. Of course this relative shift means the savings rate declined from 4.7% to 4.6%, which is to be cheered by economic models the emphasize spending over saving.”

This pessimism seems to be reflected in retail sales, which fell 1.5% in the first four weeks of September from the comparable period in August, according to Redbook Research. Year-on-year growth stands at just 0.9%. The last time September retail sales were so weak was in 2009.

In fact, Reuters reports this could be the weakest holiday retail sales season since the recession:

The consultancy firm [AlixPartners] said it expects sales to grow 2.8% to 3.4% during the November-December shopping period compared with 4.4% in 2014, based on analyzing consumer spending trends so far this year.”

According to USA Today, “Consumer spending accounts for two-thirds of economic activity, and the latest result supports expectations for it to remain strong in the second half of this year.”

Or does it?

The housing market has been touted as one truly rosy sector of the economy, but it appears there may even be some cracks in that foundation.

The New York Times reports, “home prices in the United States rose at a solid pace in July, as would-be buyers competed for a diminished supply of available housing.” But the S&P/Case-Shiller Home Price Indices are considered the leading measure of US residential real estate prices, and according to those numbers, home prices missed expectations, dropping 0.2% month-on-month in July.

The National Association of Realtors reported that August pending home sales dropped 1.4%. The expectation was a 0.4% increase.

NAR chief economist and eternal optimist Lawrence Yun put a positive spin on the numbers, but even he warned that “there are looming speed bumps that have the potential to impact housing.”

Durable goods orders continue to decline. According to Business Insider, “durable goods orders fell less than expected in August, falling 2% while ‘core’ durable goods orders declined by 0.2%.”

Despite the positive spin on falling orders, the long-term trend appears less bright. Durable goods orders dropped for the seventh straight month year-on-year. And capital goods shipments fell 0.2%, the weakest number since May.

That brings us to consumer confidence.

The mainstream media trumpeted improved confidence in September. Bloomberg called the rise “unexpected,” reporting the Conference Board’s index advanced to 103, the second-highest level in eight years, from a revised 101.3 in August.

But dig into some of the numbers and the rose coloring on the glasses fades a bit.

The University of Michigan’s consumer sentiment index climbed to 87.2 in September, also beating expectations. But as it turns out, that represents the lowest since October 2014, and is now the biggest 8-month drop since 2011.

It appears that for the average American consumer, things aren’t nearly as good as the government and media wants you to think.

This post is part of our ongoing series Data Dependent: Reading Between the Lines, where we examine the real economic data not reported in the financial media. Click here to read all our articles in this series.

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