I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Tuesday, February 12, 2008
California Sales Tax Receipts
The following link is sure worth a read, especially if you live in California and/or think the 36+ million people who live there might affect our overall economy.
The above article is a bit dated, but does a good job of debunking the the savings vs asset inflation myth. Strong support for the title of your blog.
The concentration of wealth and income in our country is disturbing. It is a big time source of economic instability, imo. The lack of broad based savings and deep levels of debt carried by so many make any economic slowdown a major event.
Some agrgue that wealth concentration was a major factor leading to the great-depression. Luckily, its different this time - we have more-better helicoptors.
That -9.7% year-over-year isn't even inflated-adjusted! California is only 12% of the U.S., but those numbers sure contradict the main news of today: "Retail Sales in U.S. Unexpectedly Climb 0.3% on Spending for Autos, Fuel"... "Stocks End Higher on Upbeat Sales Data"
So that explains why last year's strip mall down the street is nearly vacant. I thought the tenants had vacated waiting for the teaser rental rates at the new strip mall under construction across the street. I wonder if they're going to finish that strip mall across the street. . . But hey, the DOW is up so why worry.
I've got a preliminary chart of the "surprisingly strong" and "upbeat" January retail sales data ready. If inflation for January comes in as expected (+0.3% for the month as seen at briefing.com) the chart looks absolutely dreadful. I'll post it once the CPI is released next week.
Once you strip out estimated inflation, gasoline station sales, and food related sales you aren't left with a very pretty picture per capita. I can tell you that much right now. Further, restaurants were clearly not the recipient of the extra sales. No sir, the consumer was clearly grocery shopping instead.
My TIPS sold off in a major way on the news (more so than their non-inflation protected counterparts).
Yay! Inflation is dead thanks to rising gasoline sales! *baffled expression*
Yay! The consumer is out buying more expensive gasoline thereby propping up our fragile economy! *baffled expression*
Yay! More emergency economic stimulus is headed our way in the form of freshly printed tax rebate checks and lower short-term interest rates to help pay for rising gasoline costs! *cough* *sputter*
In other news, my girlfriend found employment today. It is just a two month temp job but it might lead to a permanent position if they really like her (crossing fingers). Further, she's going to be working at recessionary/stagflationary resistant energy utility. Whew!!!
And lastly, yours truly propped up Costco, Wal-Mart, Albertsons, and QFC sales again today with his hoarding ways (and is attempting to scare those close to him by speaking of himself in third person).
Yay! More toilet paper! More paper towels! More towels! More socks! More non-perishable food items! More Captain Crunch! More salt! (This too is an attempt to scare those close to him apparently. Hey, the salt was on sale at QFC. What can I say? I use it for pasta, not some pagan economic downturn ritual I assure you!)
Sooner or later, the majority will be forced to come to grips with the cold harsh reality that investment returns will not meet their "expectations." I suspect many will regret that they borrowed and spent much of their future earnings. The same earnings that will likely trail future inflation.
Treasuries have outperformed stocks over the last decade - the greatest story never told.
I'm currently riding the downdraft in stagflationary thinking (as seen in the performance of TIPS).
The real yield on the 20 year TIPS is now 2%, up from the 1.8% I bought earlier about a month ago.
I took major damage as the stock market rallied yesterday. I took major damage as the stock market gave it all back today. Stagflation is out of style, again.
Seems I'm once again nearly alone in the liferaft. Since I am holding until maturity, I'll I'm really losing is opportunity cost though (had I waited I could have gotten a better rate, using the hindsight mirror). I suspect many others will be losing much more than that though.
If I had to guess, at some point in the future retirees will be seriously scrambling to find "safe" 2% real yields (once they've lowered their expectations). Clearly we are not there yet.
It seems the most popular investment of late is to lock in a mere 1.87% non-inflation adjusted yield on the 2 year treasury note. I'd really like to know how that will protect people long-term better than a 2% rate that includes an inflation adjustment (20 year TIPS).
Perhaps investors are buying the theory that the recession will be shallow and short-lived. This theory seems quite popular on TV. It is brought to us by the same people who told us that there would be no recession and that the economy is strong and resilient.
Stag,
ReplyDeletehttp://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0705/document/ec053007.pdf
The above article is a bit dated, but does a good job of debunking the the savings vs asset inflation myth. Strong support for the title of your blog.
The concentration of wealth and income in our country is disturbing. It is a big time source of economic instability, imo. The lack of broad based savings and deep levels of debt carried by so many make any economic slowdown a major event.
Some agrgue that wealth concentration was a major factor leading to the great-depression. Luckily, its different this time - we have more-better helicoptors.
That -9.7% year-over-year isn't even inflated-adjusted! California is only 12% of the U.S., but those numbers sure contradict the main news of today: "Retail Sales in U.S. Unexpectedly Climb 0.3% on Spending for Autos, Fuel"... "Stocks End Higher on Upbeat Sales Data"
ReplyDeleteSo that explains why last year's strip mall down the street is nearly vacant. I thought the tenants had vacated waiting for the teaser rental rates at the new strip mall under construction across the street. I wonder if they're going to finish that strip mall across the street. . . But hey, the DOW is up so why worry.
ReplyDeleteI've got a preliminary chart of the "surprisingly strong" and "upbeat" January retail sales data ready. If inflation for January comes in as expected (+0.3% for the month as seen at briefing.com) the chart looks absolutely dreadful. I'll post it once the CPI is released next week.
ReplyDeleteOnce you strip out estimated inflation, gasoline station sales, and food related sales you aren't left with a very pretty picture per capita. I can tell you that much right now. Further, restaurants were clearly not the recipient of the extra sales. No sir, the consumer was clearly grocery shopping instead.
My TIPS sold off in a major way on the news (more so than their non-inflation protected counterparts).
Yay! Inflation is dead thanks to rising gasoline sales! *baffled expression*
Yay! The consumer is out buying more expensive gasoline thereby propping up our fragile economy! *baffled expression*
Yay! More emergency economic stimulus is headed our way in the form of freshly printed tax rebate checks and lower short-term interest rates to help pay for rising gasoline costs! *cough* *sputter*
In other news, my girlfriend found employment today. It is just a two month temp job but it might lead to a permanent position if they really like her (crossing fingers). Further, she's going to be working at recessionary/stagflationary resistant energy utility. Whew!!!
And lastly, yours truly propped up Costco, Wal-Mart, Albertsons, and QFC sales again today with his hoarding ways (and is attempting to scare those close to him by speaking of himself in third person).
Yay! More toilet paper! More paper towels! More towels! More socks! More non-perishable food items! More Captain Crunch! More salt! (This too is an attempt to scare those close to him apparently. Hey, the salt was on sale at QFC. What can I say? I use it for pasta, not some pagan economic downturn ritual I assure you!)
*sigh*
Bizarro Economy continues on! Enjoy!
Stag,
ReplyDeleteAnother article on stagflation. Maybe Tim Bond of Barclays reads your blog.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/14/cnecon114.xml&CMP=ILC-mostviewedbox
Sooner or later, the majority will be forced to come to grips with the cold harsh reality that investment returns will not meet their "expectations." I suspect many will regret that they borrowed and spent much of their future earnings. The same earnings that will likely trail future inflation.
Treasuries have outperformed stocks over the last decade - the greatest story never told.
MAB,
ReplyDeleteI'm currently riding the downdraft in stagflationary thinking (as seen in the performance of TIPS).
The real yield on the 20 year TIPS is now 2%, up from the 1.8% I bought earlier about a month ago.
I took major damage as the stock market rallied yesterday. I took major damage as the stock market gave it all back today. Stagflation is out of style, again.
Seems I'm once again nearly alone in the liferaft. Since I am holding until maturity, I'll I'm really losing is opportunity cost though (had I waited I could have gotten a better rate, using the hindsight mirror). I suspect many others will be losing much more than that though.
If I had to guess, at some point in the future retirees will be seriously scrambling to find "safe" 2% real yields (once they've lowered their expectations). Clearly we are not there yet.
It seems the most popular investment of late is to lock in a mere 1.87% non-inflation adjusted yield on the 2 year treasury note. I'd really like to know how that will protect people long-term better than a 2% rate that includes an inflation adjustment (20 year TIPS).
Perhaps investors are buying the theory that the recession will be shallow and short-lived. This theory seems quite popular on TV. It is brought to us by the same people who told us that there would be no recession and that the economy is strong and resilient.