consumer spending

Food Stamps Cut To $1.40 Per Meal

One might think that $11 dollars less per month in food stamps for an individual is not a big deal.  But considering the maximum monthly amount one could have is $200 a month, now $189, it is.  A whopping 15% of the population are on food stamps and now will experience a 5.4% cut in benefits, just in time for the holidays.  As of July 2013, 47,637,407 people were receiving SNAP benefits.

OIl, consumer spending, and the Recession

Back in April, I crunched retail and oil price numbers and concluded that the price of oil was responsible for over half of the changes in real retail spending in the last two years. As the price of oil continued to shoot higher, on June 2, after examining the role of China's hoarding in its burgeoning strategic oil reserve, and the hoarding going on at sea by oil companies and speculators, I wrote that

Consumers believe in "green shoots" ... but aren't spending like it

Bloomberg reports that:

Confidence among U.S. consumers rose this month to the highest level since September, reinforcing signs that the worst recession in half a century is abating.
“Consumers are looking at things like the rise in stocks, they are listening to reports talking abut ‘green shoots’ and they believe it,” Chris Low, chief economist at FTN Financial in New York said in an interview with Bloomberg Television. “They believe that a recovery is coming but they don’t see it in their current job prospects.”
The Reuters/University of Michigan index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, rose to 69.4 in May from 63.1 the prior month.

Oil and Recovery

This may be the most important economic graph of the year:

Why? The above graph shows gasoline consumption in the US. The dotted blue line is April 2007-March 2008, the yellow line the remainder of 2008, and the chained red line this year's consumption.

Let us make a not unreasonable assumption that this recession is going to be somewhat "L" shaped or at least a Verizon-logo like elongated "V" with a very slow recovery after hitting bottom. Let's also assume optimistically that we are somewhere near the bottom of the cliff -- the inflection point of the "L" or "V".

How much of a recovery we get -- or worse, if we get a double-dip "W" recession -- is likely to be substantially determined by the price of Oil later this year.

US Consumer Rising from the Dead?

The shock of "Black September", at least on consumer non-durable spending, might be wearing off somewhat. Like Freddy Kreuger, Michael Myers, or Jason Voorhees, it appears that American consumer simply refuses to stay dead, but instead is rising, zombie-like, from the grave to spend another day.

Private retail service Shoppertrak issues weekly bulletins about foot traffic and sales in the nation's malls. While not a perfect indicator, it is both more frequent and also a separate source to compare with the official data. In the past it has provided early indications of the holding up -- or not -- of the consumer. For example, by the end of September it had published a special note on the collapse of foot traffic that month, the first indication of the appearance of the consumer collapse of "Black September."