Thursday, August 20, 2009

Is the Economy Stabilizing like Bernanke and the Government Claim?

Just this morning, ex-Goldman Sachs CEO and current New Jersey Governor, John Corzine, was on CNBC proclaiming that the economy is stabilizing. Several Obama officials, including Secretary of Treasury Tim Geithner, and Federal Reserve Chairman Ben Bernanke also have publicly said that the economy has stabilized.

Let's look at some actual data and then you can decide.

Recent 2nd Quarter earnings statements from major retailers:

Sears revenue down 10.3%, same store saled down 8.6%
Dick's sporting sees 2009 same store sales down 5%Barnes and Noble sales sales down 5%, some store sales down 7%
Abercrombie & Fitch sales down 23%, same store sales down 27%
JC Penney sales 7.9% sales decline, same store sales down 9.5%

As retailing analysts know, these are horrific revenue numbers. The consumer is clearly not spending money.

Here's the most recent data from the much-heralded Cash for Clunkers program. It looks like it had about a 3 week boost to auto sales, and now according to, there is a rapid decline in cash for clunkers sales, despite the Government tripling the total size of the program:

"The rush of automotive sales activity brought on by the "Cash for Clunkers" program is fading fast, according to, whose latest study of car buyer behavior indicates that automotive purchase intent is down 31 percent from its peak in late July."

So Much for Detroit's Renaissance

We are also seeing several other grass roots metrics, like a shocking decline in consumer confidence reported on Tuesday, a sharp drop in the architectural billings index (leading indicator for construction) and a plummet in consumer credit and bank lending.

If our economic and political leaders are seeing signs of "stabilization," I'd love to know exactly what data they are looking at.


  1. Don't forget to factor in inflation for these numbers. It's worse than it looks.

  2. I totally agree with that, but I didn't want to get into any disputes about the Govt CPI vs. real inflation LOL