Economy watch: Don't believe the politicians. No improvement is in sight.

 

The news media keep trumpeting economic "good news" - which is largely made up out of whole cloth, ignoring the reality of what's going on all around us - but if you dig down and look at the fundamentals, things are still very fragile.  Here are a few examples.

• Wayfair CEO likens home goods slowdown to 2008 financial crisis:  “Our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a news release. “Customers remain cautious in their spending on the home.”
• Car Repos Rise 23% YoY:  The private debt crisis is becoming apparent in America after car repossessions jumped 23% during the first half of 2024. Data shows that 1.6 million Americans will have their car repossessed by the bank before the end of the year.
• Financial Strain On American Households Hits Retailers Hard:  American consumers, increasingly overextended on credit card debt, and having depleted their pandemic-accumulated savings, have started to close their wallets to all but essential, non-discretionary purchases such as food and fuel. The portion of surveyed Americans who state a positive intent to purchase big ticket items such as a home, an automobile, or a major appliance has fallen substantially since May.
• Burgers, Botox and Birkins: Consumer Pullback in China and U.S. Hits Broadly:  “With a large chunk of world consumer spending under pressure, companies now need to be more creative about avenues to generate revenue growth,” said Gregory Daco, chief economist at Ernst & Young.  If consumers in the U.S. do falter, it would mean a double whammy for multinational companies, which have been confronting weak demand in China for several quarters.

You can read more details by following the links provided.

If you're well off, you probably haven't noticed much of what's been going on, because wealth has an insulating effect.  For the rest of us, having to count our dollars carefully and plan where best to spend them, it's been a very difficult year so far.  All I can say is, keep your powder dry - by which I mean, spend as little as you can, cut out non-essentials, and save up to build an emergency reserve fund in case of hard times.  For a lot of families, the loss of even one month's income by their primary breadwinner is unaffordable right now - but I have a feeling a lot of us are likely to face that, and worse, before too long.

The coming elections in November will make things worse, not better.  If political unrest breaks out in the streets, adding to peoples' already agitated emotions, who knows what the knee-jerk reactions might be?

Stay careful, friends.

Peter