The US consumer has been driving a 4-speed and he’s just shifted up, now in 3rd. That gear won’t handle what’s just ahead.
We predicted vigor in consumer spending long before most other observers (thank you very much). Now these who missed the trail all want to camp with us. But there’s a bear about in the form of $5 gasoline so we’re long gone.
Spending just ahead will slow; it will not stall but will certainly slow and this is naturally tied to oil. Thus, assume the Apr/13 release for Mar Retail Sales exceeds estimates. The market crowd will be cheered. Don’t be.
Next, March CPI is to be released on Apr/15, Friday. Since Federal Reserve chair Uncle Art Burns convinced the BLS to ex out most of what counts (at Nixon’s urging, with the ’72 election in mind) CPI presents little problem to Bernanke.
Headline CPI jumped in Feb primarily due to energy prices. Imagine what headline Apr CPI will do! But to the Fed, no problem. Energy prices are about 15% above year ago levels (as of Feb) yet core consumer prices (ex food & energy) are up only 1.1%, yr to yr.
How convenient.
This reminds us of Abe’s story about the calf. During a Congressman’s boasting about a supposed McClelland “victory,” Lincoln brought up the story about the 5-legged calf. Seems there was a boy who when asked how many legs his calf would have if he called its tail a leg, replied, “five,” to which the response was that calling the tail a leg would not make it a leg.
Robert Craven
We predicted vigor in consumer spending long before most other observers (thank you very much). Now these who missed the trail all want to camp with us. But there’s a bear about in the form of $5 gasoline so we’re long gone.
Spending just ahead will slow; it will not stall but will certainly slow and this is naturally tied to oil. Thus, assume the Apr/13 release for Mar Retail Sales exceeds estimates. The market crowd will be cheered. Don’t be.
Next, March CPI is to be released on Apr/15, Friday. Since Federal Reserve chair Uncle Art Burns convinced the BLS to ex out most of what counts (at Nixon’s urging, with the ’72 election in mind) CPI presents little problem to Bernanke.
Headline CPI jumped in Feb primarily due to energy prices. Imagine what headline Apr CPI will do! But to the Fed, no problem. Energy prices are about 15% above year ago levels (as of Feb) yet core consumer prices (ex food & energy) are up only 1.1%, yr to yr.
How convenient.
This reminds us of Abe’s story about the calf. During a Congressman’s boasting about a supposed McClelland “victory,” Lincoln brought up the story about the 5-legged calf. Seems there was a boy who when asked how many legs his calf would have if he called its tail a leg, replied, “five,” to which the response was that calling the tail a leg would not make it a leg.
Robert Craven
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