I’ve been expecting this. I have been unalterably bearish on the so-called “recovery” ever since the ECRI restated its position in September last year that another recession started last summer. That call has largely been ignored by the media. But today Bloomberg ran through the latest economic indicators. There’s nothing like reality to dampen misplaced enthusiasm.
Let’s take them one at a time:
The Conference Board’s index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64. (my emphasis)
But it’s just coincidental, according to Bloomberg, that the decline hit when payroll taxes went up:
The drop in confidence coincides with a two percentage point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pickup in spending in the fourth quarter.
I was visiting with the general manager of a high-tech firm here in town on very day that he had to break to news to his 20 employees that their payroll taxes were going up. They were going up by about $80 every pay period – every two weeks – and most of them didn’t understand. They didn’t see it coming. They were mad. The GM was surprised that they didn’t know it was coming. He said something like, “They voted for Obama who promised them he wouldn’t raise the taxes. They feel betrayed.”
The Conference Board’s gauge of present conditions fell to a three-month low of 57.3 in January from 64.6. The measure of expectations for the next six months slumped to 59.5, the lowest since October 2011, from 68.1.
The share of consumers expecting more jobs to become available in the next six months dropped to 14.3 percent in January, the lowest since December 2011, from 17.9 percent the previous month.
The number of respondents who said jobs are currently plentiful declined to 8.6 percent in January from 10.8 percent. Those who said jobs are hard to get rose to 37.7 percent from 36.1 percent.
The share of Americans planning to buy a car in the next six months fell to 10.1 percent, the lowest since April 2012.
The Comfort Index:
The Bloomberg Consumer Comfort Index dropped in the week ended Jan. 20 to the lowest level since early October as Americans’ concerns about the economy mounted.
The Michigan Index:
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped in January to its lowest point since December 2011.
And I noticed that the price of gas is heading back to $4.00 a gallon.