QUOTE OF THE WEEK
“Sometimes you climb out of bed in the morning and you think, “I’m not going to make it”, but you laugh inside remembering all the times you’ve felt that way” – Charles Bukowski
TECH CORNER
Where is the Recession?
I follow multiple investment people online. One who I have great respect for is Stephanie Pomboy. She has her own research firm.
I just listened to a podcast where she was interviewed on The Thoughtful Money site. We believe in following the data because the data will be correct in the long-term. Here are a few of the statistics she discussed on the podcast.
+ Consumer Confidence report came in much weaker than expected.
+ The consumer is drawing down savings and increasing credit card balances just to pay for necessities. Credit card balances are at the level just after the Great Recession of 2008-2009. This is a tale of two economies. The highend consumer is doing fine but the lower end consumer is really hurting.
+ Last quarter’s GDP came in at +1.6% which is a slowdown from the prior quarter. Of the +1.6%, 1.2% was the consumer spending on housing, healthcare, and insurance which are necessary items. That really doesn’t contribute to growth.
+ Another indicator of trouble ahead is the consumer spending in restaurants. In January the National Restaurant Association reported the lowest level of spending since Covid ended. There was a slight increase in February, but the spending went down back to the January level. Already McDonald’s and Starbucks are reporting major declines in sales. Red Lobster just closed 60 locations and many more restaurant chains are reporting declines is business. The ISM services index last month recorded a reading of 46. A score of 50 is breakeven. A score above 50 indicates growth and a score under 50 indicates contraction.
+ Many companies had a hard time finding and getting quality employees after the COVID recession. Now as business is slowing companies are reluctant to lay anyone off but they are cutting employee hours. Full-time jobs have actually decreased -1.5% over the last year and part time employment has exploded. The consumer now needs two jobs to meet expenses.
+ Let’s talk about earnings in the S&P 500. Last quarter the top 10 companies accounted for 1/3 of the earnings. The top 100 accounted for75% of the earnings. The bottom 100 actually lost money last quarter.
I could go on and on, but the direction of the economy is pretty clear.
