The economic data that's been released for December and January now appear to be confirming my view that the economy hit a wall in November. As I suggested here: Expect A Decline In Auto Sales Going Forward, auto sales would start to plummet this year. Based on today's auto sales report for January, I may be on the right track. Ford's sales were down 7.5%, GM down 12% and Chrysler was up 8%. Note that Chrysler's sells the least number of cars of those three. Toyota's sales dropped 7.2% and Volkswagon's fell 19%.
The bad weather excuse just does not hold water. What makes it even more absurd is the fact that private construction spending - i.e. housing and commercial real estate - increased a little in January. Wall Street analysts and financial media reporters want me to believe that the same weather across the entire country that didn't prevent outdoor construction spending prevented people from looking for new cars? Really? Just for the record, I bought a new (used Subaru WRX) in January and I was test-driving in 20 degree weather right after a big snow storm.
And what about the plummet in manufacturing? The ISM manufacturing index registered its biggest miss of expectations on record for January and the new order index plummeted the most since 1980: Bad Weather Inside? Is Wall Street going to explain to us that leaky factor roofs and broken heating systems prevented factories from operating during bad weather days in January? Well the Purchasing Managers manufacturing index also missed expectations and the sub-indices for new export orders and order backlogs slipped below 50, indicating a contraction. Hmmm...did bad weather prevent purchasing managers from picking up their office phone and placing new orders?
The truth is that the consumer is done. According to reports from insiders at Dell, they are getting ready to cut 15,000 from the workforce. Several major retailers are chopping heads and closing stores. JC Penny and Sears are fighting off bankruptcy. The economy is in big trouble and Wall Street wants us to believe that bad weather is the culprit. George Orwell is looking down on us from somewhere in the heavens with a giant grin on his face.