There’s been an ominous aura in this country for some time, which makes hurricane Sandy even more eerie. I’ve called this the dropout nation. Sadly, rarely does a week go by without there being more evidence of people throwing in the towel. From the plunge in marriage to an insane willingness to rent in places where it’s prohibitively more expensive than owning, Americans have more or less said live for the moment because it will not be better tomorrow. Perhaps no data stream illustrates the dropout nation more than income, spending, and savings reports.
I was dreamin' when I wrote this
Forgive me if it goes astray
But when I woke up this mornin'
Could of sworn it was judgment day
The sky was all purple
There were people runnin' everywhere
Tryin' to run from the destruction
You know I didn't even care
Prince sang “1999” about people mostly living in the moment, saying “party over, oops, out of time” as an anthem for all the anxiety that surrounded the new millennium. The notion was that the year 2000 would usher in “judgment day” or a wave of disasters, so people should just party hard in the meantime.
I’ve said for a long time we have become a dropout nation, and part of that is just the idea of spending money, eschewing investing, and living in the moment.
This morning personal spending and income for September was released, with the former beating the street while the latter was only “in-line.” The reality is incomes have lagged not only inflation, but in actual terms too. People are making more than $4,000 less than they were a few years ago. The data seems to suggest they have decided to forget about tomorrow. Prince worried about wars and bombs, but these days it’s about fiscal cliffs and exploding debt. Yet this trend goes beyond the latest hi-jinks in Washington.
Headlines and newsreaders spoke to spending in the month of September coming in better than expected. Umm… that’s fine and maybe what Ben Bernanke is rooting for, but it’s the kind of spending that has a limited multiplier effect. This type of spending has been taking place mostly in malls, which explains the strong showing in retailer earnings, particularly dollar stores and discounters, but this doesn’t create jobs. In fact, even as people spend gobs of money by dipping into savings, we are in the midst of the worst earnings season measured by revenue in more than fifteen years.
Damn near 65% of companies have missed the top line thus far.
Savings according to the Commerce department peaked in the second quarter of 2010 at 5.6% and have been drifting lower to the point of freefall.
The X Factor
Don't ya want to go (1999)
Don't ya want to go (1999)
We could all die here today (1999)
I don't want to die
I'd rather dance my life away
At some point savings dries up completely. Toss in retreating incomes and a lack of faith in the future in general and people are taking Prince’s advice. In a way this might explain all those dance and talent shows. The “X Factor” on television reflects the X factor in America… dancing our life and troubles away.
The Brunt of the Storm
Sandy got nasty overnight, living up to the hype as it battered New Jersey and New York. The stock market is closed once again, and that means the last three sessions of the week could be crazier than normal.
Walking out of a midtown hotel this morning, I felt as if I was witnessing a scene from “I Am Legend” with empty, eerie streets, although no signs of lions. It was humbling in many ways, but in a matter of hours the city will be back on its feet, people will rush to and from work as cabbies menace pedestrians and as tourist trip over as they look up at all the tall buildings.
In Other News: Verizon Releases Statement on FCC’s “1930’s Era Regulations” in Morse Code | Michael Schaus