Proverbs 22:3 NLT

A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.

-- (((Charles Finney, said the following: “If
there is a decay of conscience, the pulpit is responsible for it))) --


THOSE WHO WILL DO NOTHING NOW, WHEN IT COSTS THEM LITTLE - WILL DO EVEN LESS LATER, WHEN IT COST THEM EVEN MORE


Stan Deyo Earthquake / Volcanic Forecasts

Stan Deyo Earthquake / Volcanic Forecasts
Earthquake / Volcanic Forecasts

Monday, July 15, 2013

By Michael Mccune: The Rant (US Government auditor for 16 years- Retail Down, Gas Prices Rise, Economy Goes...Where?- (( to Have Michael send you the Rant to your Email contact Him Here (( memccunewyo@yahoo.com ))

Note: The Rant freely admits it is at odds with the government economists who optimistically predict the future while adhering to an agenda either to sell the stock market or promote the Administration's programs. Here, there is no agenda, only the number trail is examined.--Mike

 
Retail Down, Gas Prices Rise, Economy Goes...Where?
It is earnings report season on Wall Street and traders like what they are seeing. How that can be is anyone's guess when the data behind the headlines is dissected.
 
Today, three items jump off the table screaming for attention that is being missed on Wall Street and Washington. First, is the continued slowdown in retail sales. Second, business inventories barely rose in May. Third, there is a gas price rise in the near future which has always meant an economic slowdown until consumers adjust.
 
The Commerce Department issued the first two reports and Lundberg survey the third. All three reports are not showing evidence of a continued economic recovery.
 
The Commerce Department report on retail sales showed Americans were finally forced to replace the items they have avoided for several years--vehicles, furniture and clothing. But this came at the expense of almost every other category--particularly entertainment. Consumer spending rose .4% in June from May but was mostly accomplished on debt as wages again were flat.
 
Dropping the volatile vehicle, gasoline and building supply categories as Commerce normally does from its core retail report and June showed an anemic .15% gain from May. This leaves the second quarter economic activity on retail sales well below the tepid 1.8% rate in the year's first quarter and well below the Federal Reserve's stated goal of 3.5% annual increase after inflation.
 
The target inflation rate (2.5%) hasn't been achieved anywhere except in the increase in the stock markets. The real hidden factor is the second quarter came in like a wimp and got progressively weaker the longer the quarter lasted.
 
America isn't the only country fighting a slowdown. China, which needs to expand its standard of living for the rest of the world to keep going, saw the weakest quarter report in more than 20 years. This cannot be long-term good news for the multi-nationals on Wall Street. 
 
The weak replacement in business inventories is a hammer blow. June is typically the change-over month when stores clear off summer items to open the way for the fall lines. Brisk sales in June mean the stores are clearing this backlog before the back-to-school sales begin. This did not happen.
 
What is ludicrous is the economists are arguing over whether the inventory rise is .1% or .2%. The fact businesses are being cautious about restocking is all the economy needs to know. Sluggish inventory means the third quarter GDP report will get no boost from this sector as is usual.
 
Because consumers are being more careful with their dollars, the U.S. trade deficit is widening again. This is prompting economists to cut even the meager inventory gains as second quarter GDP will probably be cut further when all the June data is collected and assimilated.
 
Because of the slump in inventory replacement, second quarter annual GDP growth rate could be less than .5%. Based on the gloomy predictions after the 1.8% rate recorded in the first quarter, where is the teeth-gnashing after the rate was cut by more than two-thirds?
 
As if the slowdown in consumer spending and the over-stuffed shelves aren't enough to derail the economy, this was all happening while fuel prices fell even further. Gasoline, for instance, has been dropping for the past three weeks. Crude oil prices have been surging and those higher prices are about to hit the wholesale market. Next stop is at the pump.
 
U.S. crude futures have increased about 10% over the past month. With current pump prices hovering around $3.60 a gallon, prices could return to $4 a gallon before the end of July--almost 58 cents a gallon more than they were at the end of July last year.
 
This increase is not reflecting the added tax hikes many states imposed on fuel which took effect on July 1 to compensate for reduced highway construction support from Washington.
 
There have been no official Commerce Department estimates of how the increase in fuel prices will affect the weakening economy. Energy Department estimates continue to show large gasoline supplies available but it acknowledges the cost of crude is the main driver in fuel price changes.
 
Consumers finally showing the loss of discretionary income is hitting their habits and businesses unable to restock shelves are bad news for economic progress. Higher fuel prices on top of those facts could be dismal final half of 2013 when it started with such high expectations.
 
Maybe this is the real reason Obama deferred Obamacare's implementation on business--if they aren't moving inventory but get hit with additional expense too many of them will have to close their doors putting even more people in the unemployment line again.
 
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

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