Check out the nice article by Gretchen Morgenson
of The NY TIMES- as she checks in with Charles Biderman of TrimTabs. Apparently Charles has come up with a new consumer spending index and it isn't pretty. Her are some of the salient points of the article:
The big picture is: the amount of money people have to spend, which includes money on real estate transactions, is plummeting, and it started to break down in October”
Mr. Biderman said his data, in contrast to the indicators the federal number crunchers produce, are contemporaneous and offer much more insight into what is happening in the economic here and now.
He said data from the Bureau of Labor Statistics and the Bureau of Economic Analysis rely on outdated figures and outmoded methods. Mr. Biderman’s assessment of current employment and personal income pictures, for instance, is gleaned from sources that include daily deposits of withheld income and employment taxes reported to the United States Treasury. This compares with the monthly employment analyses put out by the Bureau of Labor Statistics, which are preliminary and, Mr. Biderman says, based on flawed surveys and extrapolation of historical data.
No surprise, he says, that the initial figures from the bureau are so often adjusted significantly later on.
TrimTabs calls its new measure the Consumer Spendables Indicator, and it sensibly includes these crucial sources of consumption cash: after-tax wages; after-tax income from nonwage sources, like capital gains, dividends, pensions, partnerships and self-employment; and net equity extraction from consumers’ homes, either through property sales or mortgage refinancing.
For the first time since the fourth quarter of 2003, TrimTabs estimates, consumers will have less money to spend this quarter on a year-over-year basis. The firm expects this figure to fall 0.6 percent from the same period in 2007.
TRIMTABS, which estimates employment growth using data from an online job index and an analysis of income tax withheld versus job creation rates, has been far more accurate than the Bureau of Labor Statistics. For example, in 2006, the government’s initial estimates of employment growth came in at 1.52 million jobs. But the bureau revised that data upward in February 2007, for a total of 2.24 million.
By comparison, TrimTabs’ estimates of 2006 employment growth, using real-time data, totaled 2.39 million jobs. The firm reported those figures to clients contemporaneously.
Last week, TrimTabs told clients it estimated that 77,000 jobs would be lost in February; Wall Street economists are calling for a gain of 30,000 for the month.
Since October 2007, TrimTabs estimates, the economy has lost about 175,000 jobs, the first sustained employment drop since early 2003. Growing job losses naturally will contribute to a weakening consumer, whose ills will affect the overall economy. And the stock market is feeling this pain as well, in Mr. Biderman’s view.
Now for the good news:
Happily, Mr. Biderman does not expect the recession to last much longer than the end of 2008. “I see this thing lasting longer than the bulls think but not as deep as the bears expect,” he said. “People will start feeling better late this year.”
The IBD 100 for this week includes the following- and note a new addition CNQ- a large holding for two of my favorite funds FAIRX and WGRNX: