The economy: The economy is on a roller coaster—directionless but thrilling. Riding high in April, the economy swoops down in May and again in June before ticking up in July. This is the third time economic activity rose and then fell since the recession began.
Consumer spending: Active shopping for housing moves down from 9% in April, to 5% in May, 6% in June, and 4% in July. The percent actively shopping for new cars falls from 8% in May to 4% in June, and 5% in July.
The President: The percent pleased with Obama’s performance in office decreases progressively from 48% in May to 44% in June, and to 43% in July.
The political parties:Republicans gain strength between May and June but then lose about half their gain between June and July.
The Democratic 13-point advantage over the Republicans in May (45% Democratic vs. 32% Republican) shrinks to five points in June and then increases to eight points in July.
In the hurly burly of partisan conflict, the Democratic Party has been able to retain a lead over the Republican Party even though Obama’s approval rating decreases.
Oil spill: When asked to name the major problems facing the nation in June and July, roughly one in four Americans spontaneously talk about the oil spill.
On balance those who name the oil spill spontaneously are more upbeat about the nation, its economy, and the performance of Obama in office than those who do not name the oil spill spontaneously.
Specifically, among those who name the oil spill spontaneously, more are pleased than displeased with Obama’s performance in office (50% pleased vs. 32% displeased); more say things are going better than going worse for the country (42% better vs. 24% worse); and more feel the economy is getting better than feel the economy is getting worse (57% better vs. 37% worse).
On the face of it, the struggle to contain the oil spill seems to have united the nation, much as it was by the attack on Pearl Harbor, the destruction of the Trade Towers and the British massacre of Colonists.
Equity prices: Prices of equities continue to fluctuate widely in response to the alternating mixture of good and bad news reported in the press. Between June and July, the ratio of prospective buyers to prospective sellers in the event of a 10% decline in the price of the Dow increased from 1.11 buyers to each seller to 1.70 buyers per seller.
BACKGROUND NARRATIVE & STATISTICS
The CONSUMER BALANCE INDEX (CBI), which tracks consumer perception of their ability to sustain their current rate of spending by assessing their financial balances – income and assets versus debt and current spending rate –ticks up a point in July.
The uptick reflects an increase in the percent of consumers with the “Strongest” financial balances, from 18.0% in June to 21.8% in July.
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Consumer Spending
In line with the increase in the number of consumers who have the strongest financial balance, the index tracking active shopping for big ticket items increases eight points, from 96 in June to 104 in July.
However, consumers are selective and cautious in active shopping for big ticket items. The largest gains are for used cars, personal computers, televisions, and other modestly costly items.
Active shopping for housing, the costliest item, actually ticks down two points between June and July. For new cars, the next most costly item, the 5% actively shopping in July is up a tick from June but three points lower than the 8% who actively shopped for new cars in May.
Consumer willingness to spend freely for food, clothing, gasoline, and medical expenses decreases from 83 in June to 80 in July.
CONSUMER SPENDING: May, June, & July 2010
(1,492 telephone interviews of which 503 were conducted in May 2010, 501 in June 2010 and 488 in July 2010)
| May 2010 |
June 2010 |
July 2010 |
Diff. May-July |
||
| Willingness to Spend Freely for Consumables: | |||||
| INDEX | 73 | 83 | 80 | -3 | |
| Percent Spending Freely For | |||||
| Food | 36% | 41% | 41% | +5 | |
| Clothing | 32% | 39% | 36% | -3 | |
| Gasoline | 43% | 51% | 46% | -5 | |
| Medical Services | 65% | 70% | 68% | -2 | |
| Active Shopping for Major Goods Index | 110 | 96 | 104 | +8 | |
| Percent Actively Shopping For… | |||||
| New Car | 8% | 4% | 5% | +1 | |
| Used Car | 9% | 4% | 8% | +4 | |
| House | 5% | 6% | 4% | -2 | |
| Furniture | 9% | 11% | 12% | +1 | |
| Personal Computers | 10% | 6% | 10% | +4 | |
| Major Appliances | 10% | 8% | 8% | 0 | |
| New Carpeting | 5% | 3% | 2% | -1 | |
| Color TV | 10% | 8% | 11% | +3 | |
| Air Travel | 18% | 18% | 17% | -1 | |
| Overnight Hotel/Motel | 20% | 21% | 21% | 0 | |
Equity Prices
Consumers who own stocks directly or in mutual funds become more confident about the future prices of equities. Between June and July the number of prospective buyers to sellers of stock if the Dow went down by 10% increases from 1.11 buyers per seller in June to 1.70 buyers per seller in July.
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Comment
The July 8Sages.com posting should be read as a “real time” report on what has already happened in the first ten days of July. If July continues on the course it has taken during its first ten days, the “batch time” reports on what happened to the economy during the full month of July that will appear in the August press will tend to be mildly positive.
Longer term, economic growth is poised to explode with the end of the Great Recession and the resolution of war.
For a discussion of the coming boom in the economy and the changes in the structure of the economy now in progress, request a free copy of the Synopsis of the forthcoming book titled The Pursuit of Happiness in Today’s Emerging Grazing Society. Please make your request using the Contact Us link (top of page).
Copyright July 2010 by Leo J. Shapiro – All Rights Reserved.