Shopped Out?
Barry Ritholtz of The Big Picture and I are the latest installment of the Wall Street Journal's Econoblog feature. Here's the teaser:
The free-spending U.S. consumer has been fueling economic growth for years. But with prices at the pump creeping ever higher and signs of a slowing housing market starting to emerge, will the credit cards finally be put away?
Retailers like Wal-Mart have been complaining for months that costly gasoline has been keeping more price-conscious shoppers away from their stores, and with gasoline and other commodity prices marching higher in the wake of Hurricane Katrina, the squeeze is likely to get tighter. Meanwhile, workers' hourly earnings fell behind the pace of inflation in July, and personal saving levels have dwindled to 0%, leaving highly indebted consumers little financial cushion other than their homes -- which many have already leveraged heavily.
So is the long national shopping spree finally winding down?
I confess that I hadn't noticed Barry's exceptional blog until I started trading columns with him--a true embarrassment on my part after 11 months in the blogosphere. He's got excellent material on capital markets and the major economic releases, as well as a keen eye for developments in music and technology. He's got no sympathy for people who blow bubbles or don't pay attention to their data. And the graphics on his blog rival any that I've seen. Here are a couple of interesting posts, to get you started, if you are also new to his blog:
The Return of the 30 Year Bond
The Soft Prejudice of Low Expectations: The Federal Deficit
Consumer Issues and Investors
The Physics of 4 Wheel Drive and Snow
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4 comments:
Concerning the official savings rate, I don't see how people can take this number seriously when it ignores the underground economy. Could someone please explain where I am going wrong?
I don't think you've gone wrong anywhere, except that you haven't been particularly clear about the size of the direction of the bias imparted to the offical number. Do you think a greater fraction of total consumption or disposable income goes unreported? If it's roughly the same percentage for both (or if the underground economy isn't too large), then the bias is likely to be small.
My graphics are exceptional 'cause I steal from exceptional sources: WSJ, NYT, Economist, etc.
We're getting shopped out Down Under, too: "Westfield, the country's retail bellwether, has issued a sobering warning for the economy after revealing that sales conditions will slow in the next six months...." http://money.howstuffworks.com/cooking-books.htm/printable
Barry is the top of my links. I've pestered him with email & comments for over a year and he always responds. He always seems to be the first to turn in his homework.
I've got you in favourites, too, now.
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