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Personal Income & Spending Weak
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ShareThis morning, the figures for personal income and spending came out, and it is a continuation of the long series of bad economic news we have been getting. In real terms, consumer spending has not risen since May, and has been down in three of the last four months.
The increase in May was probably entirely attributable to the stimulus checks. The reason for the poor spending is a lack of income. Disposable personal income has plunged recently, although it was very fractionally higher in September. This data confirms the awful data we got yesterday from the GDP report which showed Personal Consumption Expenditures falling at a 3.1% rate in the third quarter.
Keep in mind that the worst of the credit crunch did not happen until after the fall of the house of Lehman Brothers in mid-September. The numbers for the month of October should make the September numbers look like the good old days.
The obvious losers from this data are the Retailers. Put simply, Santa is being held prisoner by the boogey man in Halloween town. Christmas this year will be mostly a religious observance, not a spending spree. Stay far away from the whole group, but especially the mid-range firms like J.C Penney (JCP - Analyst Report), Target (TGT - Analyst Report), Kohl's (KSS - Analyst Report), Limited (LTD - Analyst Report), Gap (GPS - Analyst Report), Macy's (M - Analyst Report) and Abercrombie & Fitch (ANF - Analyst Report).
A few smaller names to avoid would be Hibbett Sports (HIBB - Analyst Report), HH Gregg (HGG - Analyst Report), Charlotte Russe (CHIC) and Cost Plus (CPWM - Snapshot Report). Discounters like Wal-Mart (WMT - Analyst Report) and Costco (COST - Analyst Report) will have an offset of people trading down, but taking a bigger slice of a shrinking pie is still a tough game to play. Also avoid the retail focused REITs, after Christmas, there will be a whole lot of stores shutting down, and big sections of empty stores in a mall is not good news for the owner of that mall.
| May /> | June /> | July /> | Aug /> | Sep /> |
| 1.9 /> | 0.1 /> | -0.8 /> | 0.4 /> | 0.2 /> |
| May /> | June /> | July /> | Aug /> | Sep /> |
| 5.7 /> | -1.8 /> | -1.0 /> | -1.0 /> | 0.2 /> |
| May /> | June /> | July /> | Aug /> | Sep /> |
| 5.3 /> | -2.5 /> | -1.6 /> | -1.0 /> | 0.1 /> |
| May /> | June /> | July /> | Aug /> | Sep /> |
| 0.7 /> | 0.5 /> | 0.0 /> | 0.0 /> | -0.3 /> |
| May /> | June /> | July /> | Aug /> | Sep /> |
| 0.2 /> | -0.2 /> | -0.6 /> | 0.0 /> | -0.4 /> |
Read the full analyst report on JCP
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Read the full analyst report on JCP
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Read the full analyst report on GPS
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Read the full analyst report on CHIC
Read the full analyst report on CPWM
Read the full analyst report on WMT
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