Sunday, August 25, 2013

Alternative CredAbility Consumer Distress Index

St. Louis Fed: CredAbility Consumer Distress Index

The Index score is tied to one of 5 general rating categories, which reflect the strength and stability of the consumer’s position.

Less than 60 Emergency / Crisis
60 – 69 Distressed / Unstable
70 – 79 Weakening / At-Risk
80 – 89 Good / Stable
90 and Above Excellent / Secure

What Does the Index Measure?

We measure the 5 categories of personal finance that reflect or lead to a secure, stable financial life—Employment, Housing, Credit, Household Budget and Net Worth. All are equally important, so have given each category equal weighting.


Click to enlarge.

That index is showing a relatively strong recovery from "distressed/unstable" to "weakening/at-risk". Yay.

As seen in the following chart, I have chosen to use the median instead of the average. Why? A few good apples can't purify the barrel! Put another way, I think the median can generally do a better job of describing the core trend (and where we are within it).


Click to enlarge.

As of the first quarter of 2013, the median index value was 65.5 (solidly "distressed/unstable"). The index most responsible for the recent decline in this chart was the household budget distress index. It's doing some serious damage to this alternative consumer distress index (just like it was heading into the last two recessions).

The long-term trend (seen in the red trend line) is definitely not our friend. In my opinion, we're in rearranging deck chairs mode. We can temporarily boost some of the indices apparently (but only at the expense of the others). And why might that be?


Click to enlarge.

The looting will continue until morale improves.

July 30, 2013
PandoDaily: America can kiss its ass and consumer economy goodbye: The view from dystopia

Entrepreneurs and digital marketers spend their days dreaming about the next hot thing that will drive the American consuming class into lucrative paroxysms of purchasing. The looming problem with this dream is that the consuming class appears to be on the endangered list.

A new non-partisan government study confirms that income inequality in America has been rising for four decades and projects it will continue getting worse for at least 22 more years. If this keeps up much longer, eventually the super rich will have all the money and the rest of us will be locked into poverty. Forever.

Nail... on... the... head.

Just opinions! Once again, this is not investment advice.

Source Data:
St. Louis Fed: CredAbility Consumer Distress Indices
St. Louis Fed: Gini Ratio of Families

10 comments:

Mr Slippery said...

Or, you could forget about Wal*Mart and Target sales, Gini indexes, etc. and double down on sunglasses!

Stagflationary Mark said...

Mr Slippery,

Buy one set of welding goggles at the regular price and get a 2nd pair absolutely free!*

* Just pay separate shipping and handling

Stagflationary Mark said...

And for those just tuning in, I should point out the welding link.

Stagflationary Mark said...

Mr Slippery,

From your link:

The Future is still Bright!

January 25, 2009
Still Investing

"Still" is and has been one of my favorite investing terms. I can't even begin to tell you how much I trust/distrust it depending on its usage. There must be some part of the brain that knows to use it when we try to rationalize something away.

...

Welcome to the financial storm. We're "still" in it!

It's been 4+ years. How much has the Fed needed to boost interest rates to cool the expansion?

Not much.

Mr Slippery said...

It's been 4+ years. How much has the Fed needed to boost interest rates to cool the expansion?

Aside from interest rates, how much have they had to buy assets like mortgage backed securities and treasury bonds?

Not much.

I guess those two charts "still" look perfectly normal to some people. LOL.

mab said...

I have chosen to use the median instead of the average.

Nattering nabob of negativity.

Don't you know that type of behavior is "frowned upon":

http://www.youtube.com/watch?v=CyB1xEPN1PE

You're definitely on multiple NSA Christmas card lists.

Stagflationary Mark said...

Mr Slippery,

I guess those two charts "still" look perfectly normal to some people. LOL.

What happens when we multiply the two charts together?

Not much x not much = pefectly normal!

Genius! ;)

Stagflationary Mark said...

mab,

You're definitely on multiple NSA Christmas card lists.

It's always nice to have a Secret Santa! I just hope they don't regift the White Elephant in the room!

Troy said...

"If this keeps up much longer, eventually the super rich will have all the money"

is the curious thing.

I see the economy as a matter of flows and (hopefully) cycles, like how it was depicted in my 1960s-era World Book encyclopedia, with the farmer paying the tractor salesman paying the cafe owner paying the store owner paying the wholesaler paying the grain company paying the farmer . . .

So I was reading http://www.postandcourier.com/article/20130826/PC05/130829653/1010/nation-x2019-s-former-top-auditor-eyes-federal-debt-warily at breakfast yesterday:

"Now the biggest risk that we have fiscally is interest. We’re spending (more than $200 billion) a year on interest. The president’s own budget projections say we’ll be spending (almost) $800 billion on interest (per year) in ten years. And what do you get for interest? Nothing. I say shinola. I’m from the South."

I remember when the interest burden was twice what it is now:

http://research.stlouisfed.org/fred2/graph/?g=lOi

but the big analytical mistake with that statement is the ignorance that interest payments, with a balanced budget at least, are another form of redistribution, from taxpayers to savers.

A form of redistribution our host is intimately familiar with, LOL.

Government does not necessarily have to "get" anything for its money. Its role is to Distribute.

I am not a marxist redistributionists per se, as that's way too Procrustean and is thus non-optimal.

But what we need is some sort of "extra-market" force working against the concentration of rent flows from major sectors of the economy -- health care, housing, and energy particularly.

Add in defense spending, and we've got the four horsemen of Why We're Broke.

http://research.stlouisfed.org/fred2/graph/?g=lOl

Those 4 (half of trade deficit as proxy for energy) / wages, 1960-now.

Stagflationary Mark said...

Troy,

I see the economy as a matter of flows and (hopefully) cycles...

Despair.com: Hope

PERFECT FOR:
Corporate raiders
Overly optimistic ornithologists
Soon-to-be carrion
Disaffected college students


Sigh.