The headline from the MSM this morning was that consumer spending was really strong in December after a fantastic November.
Consumer spending rose a seasonally adjusted 0.4% last month, the Commerce Department said. Economists polled by MarketWatch had forecast a 0.2% gain. The advance in December follows an upwardly revised 0.6% increase in November. The pace of spending in the last two months of the year marked the strongest back-to-back gain since the first two months of 2012.
The lead into this story makes it sound like the consumer is healthy and doing fantastic. You have to go over to Zero Hedge to find a chart that says it all.
Does this chart show a healthy consumer? It shows me we've entered a world of pain. Buried in the propaganda spewed by the corporate legacy media is the FACT that real disposable income FELL in December. The consumer had to delve into their dwindling savings to create that STRONG spending in December and November. The savings rate was 5.1% in September and plummeted to 3.9% by December. Last December the savings rate was 8.7%.
Do the oligarchs realize their propaganda doesn't pass the smell test? They desperately want the ignorant masses to believe consumer spending was strong in November and December. We know for a fact that retail sales absolutely sucked in November and December from the Commerce Dept report from two weeks ago. Sales declined at auto dealerships, furniture retailers, electronics stores, and home stores. We know for a fact that virtually every large retailer in the country has reported dreadful sales and profit results for their Christmas season. Wal-Mart issued a profit warning today. Target issued one two weeks ago. Macys, Sears, and JC Penney are closing stores.
A critical thinking individual might wonder how consumer spending could be really strong if every major retailer is reporting horrific results. Luckily for the oligarchs, critical thinking is a skill not used too much in this country. Edward Bernays' students of propaganda in the government and MSM know this and utilize our ignorance to the max.
The MSM story mentioned that the increase is being driven by spending on services. Now we are getting to the truth. The average American is ramping up their consumption in Obamacare premiums, utility bills, tolls, sewer fees, and the myriad of other government driven costs. The average American is dipping into their savings to pay for the massive Obamacare premium increases. I guess that doesn't make a good headline on Marketwatch.com.
Going to the actual data reveals a few more interesting tidbits about the strong consumer:
- Total personal income, before inflation, in December was 1% below last year.
- Total wages, before inflation, were up by a whole .6%.
- No need to worry. Government entitlement transfers soared by $53 billion over the last year.
- Bernanke did his part by making sure senior citizens and savers didn't earn one nickle more than last year in interest.
- You'll be happy to know that even though wages barely budged, the government syphoned off an additional $100 Billion of your money in taxes versus last December.
- Disposable income was 2% lower than last December, before inflation.
- Americans spent $400 billion more this December than last December by drawing down savings and borrowing. They didn't spend this at retailers. They borrowed for 7 years to essentially rent new cars, paid more for food, energy, rent, tuition, and Obamacare premiums.
Does this present a picture of a strong consumer? My favorite piece of data from the government website is at the very bottom. It is Real per capita disposable income. It takes into consideration inflation and the fact that the US population grows by 2.2 million people per year. This info paints the real picture of the American consumer.
The real disposable personal income per person in this country was $36,877 in December. It was $38,170 last December. That is a 3.4% decline. And remember, that is using the hugely understated CPI. Now for the really good stuff. The real disposable personal income per person was $37,584 in May of 2008. We are now almost six years later and disposable income per person in this country is still lower than it was in 2008.
Obama proclaimed all the great things he had accomplished in his five years in office. If unemployment has plummeted and the economy is booming at 4%, how can this be so? It can't. You've been fed a fake storyline. It's like the American Dream. You have to be asleep to believe it.
And anyone peddling the storyline that 2014 will be better is a knave or a fool - or works for CNBC. Over 1.2 million people just got booted off the long-term unemployment rolls. The SNAP program will be doling out $5 billion less of your tax dollars in 2014. The stock market appears to be a tad shakey. Obamacare premium increases will be pounding those employed. Small businesses will not be hiring. Retailers are firing thousands of employees. Energy prices will set new records. Droughts in the West will result in higher food prices. Home prices will fall as home sales stagnate.
Sounds like a recipe for a great 2014. The storyline has been played out. The people don't believe anything the oligarchs say. We have been lost in a blizzard of lies, but we can see the truth off in the distance if we look hard enough.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.