Wednesday, April 7, 2010

Mini-Double Dip?




An organization that tracks online consumer purchases to get an advance look at upcoming GDP trends reports a consumer downturn is in progress. Consumer Metrics Institute reports evidence that a downturn is brewing, with a suggestion of a negative GDP number this quarter. See the related graphs.
This is based on realtime shopping data, not projections based on historical patterns. This data comports with Gallup's polling data. It also is consistent with various small business surveys and Discover's (R) March consumer data. Discover's consumer spending data is down modestly the past 6 months in aggregate.
It just may be that Reinhart and Rogoff nailed it. A credit crisis occurs because of overuse and abuse of the credit mechanism. These crises are typically long-lasting and do not resolve soon or smoothly. ECRI is calling for the death of buy and hold stock investing due to their belief that the underlying growth rate of the U. S. economy continues to slow, and thus it won't take much perturbation of a growth trend to cause a recession. So we may have a U. S. consumer recession or growth recession this quarter if indeed a slowdown has been underway for months as described in the mor complex chart, even if exports and business-to-business trends prevent a negative GDP number.
After the run-up in stocks, it's increasingly looking like time for gold to play catch-up.
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