Mish's Global Economic Trend Analysis |
- Consumer Confidence Plunges Below Any Economist's Estimate; Consumers Shock Economists
- Empire State Manufacturing Weaker Than Economists' Expectations
- Industrial Production, Down 5th Month, Weaker Than Economist Expectations
| Consumer Confidence Plunges Below Any Economist's Estimate; Consumers Shock Economists Posted: 15 May 2015 10:04 AM PDT Consumer confidence is the third miss by economists in a single day. Please consider the Bloomberg Consensus Estimate for Consumer Confidence.  Consumer confidence has fallen back noticeably this month, down more than 6 points to a much lower-than-expected 95.2. This compares very poorly with the Econoday consensus for 103.0 and is even far below the Econoday low estimate of 100.5. The weakness, ominously, is the result of falling assessments of the jobs market, both the current jobs market and expectations for the future jobs market. The second quarter, which is expected to be much stronger than the weather-depressed first quarter, isn't likely to get off to a fast start, at least as far as this report goes.Missing the Boat Not only was the consensus outside the range of reading predictions, economists did not even get the leading sign correct. Economists expected an improvement from 101.3 to 103.0 but instead the index plunged 7.6%. For more details let's turn to the actual University of Michigan Survey. University of Michigan Preliminary Results May 2015  Comments by U of M Chief Economist Richard Curtin Confidence fell in early May as consumers became increasingly convinced that there would be no quick and robust rebound following the dismal 1st quarter (even if the under performance was exaggerated by inadequate seasonal adjustments). The decline was widespread among all age and income subgroups as well as across all regions of the country. In contrast to last year's rapid 2nd quarter revival, this year the economy faces reduced production and employment from lower oil prices, falling exports, and rising imports from a stronger dollar. Although this was not the first time in recent years consumers have abandoned expectations for a faster recovery, the data nonetheless suggest that consumers have remained optimistic about their future personal finances and have maintained their buying plans at reasonably high levels. Overall, at this time the data are still consistent with a 3% growth rate in real personal consumption expenditures during 2015.Confidence Nonsense I believe that statement by Curtin is complete nonsense. Consumers have not maintained their buying plans, at least according to Fed surveys. Household Spending But what about household spending? Please check out my May 12 report Household Spending Growth Expectations Plunge; Recession Already Started? Household Spending Expectations  click on chart for sharper image I created the above chart with data from Fed does a Survey of Consumer Expectations Spending Analysis In spite of rising earnings and income estimates, "median household spending growth expectations retreated significantly from the last month" in the Fed's words. Recession Likely Underway I commented on sales in Dismal Retail Sales Numbers Suggest Recession Likely Underway. Economists were surprised by the dismal retail sales report this morning. That's not surprising because economists are nearly always surprised. The Bloomberg Consensus retail sales estimate was a rise of 0.2%, but sales came in at 0.0% and the details were ugly. Estimated Retail Sales The Census Department offers this Table of Retail Sales.  click on chart for sharper image Note the huge patch of negative numbers this month. At least people are still eating out and drinking more. Also note the negative numbers in the November 2014 through January 2015 column. Economists expected the decline in gasoline sales (down 7.2%) to translate into increased sales elsewhere. It didn't. I am scratching my head over Bloomberg's statement "consumer confidence may be strong ...". What the heck is Bloomberg talking about? Does Bloomberg even read its own numbers? Here is a snip from the Bloomberg Consumer Confidence Level Report for April 2015, released on 4/28/2015. Consumer confidence has fallen back noticeably this month, down more than 6 points to a much lower-than-expected 95.2. This compares very poorly with the Econoday consensus for 103.0 and is even far below the Econoday low estimate of 100.5. The weakness, ominously, is the result of falling assessments of the jobs market, both the current jobs market and expectations for the future jobs market. The second quarter, which is expected to be much stronger than the weather-depressed first quarter, isn't likely to get off to a fast start, at least as far as this report goes.The Fed is not looking at those numbers either. In the latest FOMC report the Fed specifically stated "consumer sentiment remains high". Autos Only Reason YoY Sales Are Positive  Autos are now the only thing keeping retail sales positive year-over-year. And auto sales are driven by subprime loans. How long is this party going to last? Who wants a car, needs a car, can afford a car, and can get a car loan? Retail Sales Flashbacks
Consumers Did What They Said In a huge shock to economists, consumers actually did what consumers said they would do rather than what economists models predicted. And economists still don't believe it. They are looking for 3% growth this year, whereas I think the US is in recession. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Empire State Manufacturing Weaker Than Economists' Expectations Posted: 15 May 2015 08:38 AM PDT The Empire State Manufacturing survey came in today weaker than the Bloomberg Consensus Estimate, but at least the economists got the leading +- sign correct. The first indication on May conditions in the manufacturing sector is soft, as indications have been all year. The Empire State index came in at 3.09, below what were already weak Econoday expectations for 5.00. Shipments look respectable at 14.94 but are way ahead of new orders, at only 3.85, and even further ahead of backlog orders which are in deep contraction at minus 11.46. Employment growth is down as is the 6-month outlook, both pointing to a lack of optimism.Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Industrial Production, Down 5th Month, Weaker Than Economist Expectations Posted: 15 May 2015 08:12 AM PDT Industrial production came in at -0.3%, down for the fifth consecutive month below the Bloomberg Consensus Estimate.  Industrial production is stalling, down 0.3 percent in April for a 5th straight monthly contraction. Factories are cutting back with capacity utilization down 4 tenths to 78.2 percent. And the manufacturing component, which has been flat to negative all year, is unchanged. All these readings are at or near the Econoday low-side forecasts.Clean Sweep of Economists' Misses
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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