1 July 2019

1) Consumer spending increased in May as well as prices creeping up too. Both point to a slowing economic growth and benign inflation pressures. These two facts gives the Federal Reserve more reason to cut interest rates next month. Inflation is under the 2% target for this year with a projected 1.5% verses 1.8% originally expected. Consumer spending is about two thirds the U.S. economy.

2) Consumerism is changing fast, with a push to ‘no cashier checkouts’. Amazon Go stores are pushing the technology where sales payment is made automatically just by picking out items and walking out the door. E-commerce and on-line shopping continue their assault on traditional brick and mortar stores. Another strategy is showrooms in place of stores that allow the customer to try out products prior to purchasing them. Finally, drone delivery allows getting your purchases at home in less time than it takes to drive to and from a store. All these new technologies are coming together with increased profits by reducing labor cost.

3) The weekly jobless claims has increased more than expected, although there is no sign of significant layoffs as the economy slows down. Unemployment claims were 227,000 up by 10,000. The economy is slowing with manufacturing sliding down and the trade deficient widening as consumer confidence ebbs.

4) Stock market closings for- 28 JUN 19: Results from bank stress test edged markets up. Best June performance since 1938.

Dow            26,599.96    up    73.38
Nasdaq         8,006.24    up    38.49
S&P 500        2,941.76    up    16.84

10 Year Yield:    down   at    2.00%

Oil:    down   at    $58.20

22 January 2019

1) The new Congress may have profound future economic impact for America. New members of the Financial Services Committee includes members of the radical left of the democratic party, with very little experience in fiscal matters, but having a strong socialist agenda for reforms to the banking system. Fears for the impact are growing as these members expound on their desire to eliminate big banks in America.

2) Brexit is having an effect on British consumer spending. Reduce retail spending with retail sales falling 0.9% over concerns for consequence of Brexit uncertainty. Consumer spending had been strong during the summer of 2018.

3) Netflix is burning through its cash at a staggering rate to pay for their blockbuster original hits, having spent $3 billion dollars for productions in 2018. Their negative cash flow is expected to accelerate in 2019, but they are still adding new subscribers. All this to remain competitive with the other subscribers of Amazon, Hulu and Google with Apple, Disney and Warner Media also entering the market.

4) 18 JAN 19 Stock market closings:    China announced spending spree of America products, bumping the markets upward.

Dow                    24,706.35      up    336.25
Nasdaq                 7,157.23      up      72.77
S&P 500                2,670.71      up      34.75

10 Year Yield:    up   at   2.78%

Oil:      down   at    $53.76

18 January 2019

1) The question of ‘monopoly’ for the large tech companies is starting to come to light as a results of congressional questions about the power and influence of such companies as Amazon, Facebook and Google.

2) There are four major retailers on ‘death watch’ for 2019, and they are Barns & Noble, Kmart, JC Penny and Sears. This is particularly important concerning the viability of a consumer based economy.

3) There are talks circulating around Washington of easing the tariffs on China. However, there has been little progress in negotiations, in particular issues of intellectual property.

4) 17 JAN 19    Stock market closings:

Dow               24,370.10    up    162.94
Nasdaq            7,084.46    up      49.77
S&P 500           2,635.96    up      19.86

10 Year Yield:    up   at    2.75%

Oil:    up   at    $52.15

FUTURE of HYPER CONSUMERISM!!!!!!!!!!!

The Real Value to Society for the Youth of America is as Consumers, But What Becomes of Them if Hyper-Consumerism Declines.

By: James Lyman BSAE, BSEE, MSSM

Economic & Finance Report

I’m old enough to remember the first oil crisis of 1973, when the Arab nations tried to punish America for her support of Israel in the Seventy-Two war by cutting off oil shipments. American manufacturing was already in decline when the economic shock of oil shortages ripped through society. Suddenly, American manufacturing started crumbling away as factory after factory closed with American business losing all interest in making their money by manufacturing. The Rust Belt was born. Confronted with a growing problem of spreading unemployment and diminishing opportunity for people, the government had to come up with a new way of doing things, a new kind of economy.

The solution was deemed to be the service economy, the hyper-consumerism where people’s value in the economy and to society was as consumers working to support other consumers, who in turn worked to support more consumers. Instead of producing real material wealth as was formally done with a manufacturing based economy, America would depend almost exclusively on the multiplying effect of money being exchanged from one person to another, a basic principle taught in any introduction course of economics.

Not long ago I wrote another article titled, “Tiny House – Tiny Future” about how the millenniums were turning away from the traditional living in large houses and instead going to homes that are one tenth the traditional size, and consequently foregoing the purchasing common to the hyper-consumerism society simply because they no longer have the room to keep stuff. This I proposed was maybe a sign that hyper-consumerism was coming to an end, that it was not sustainable. With diminishing opportunities for the young, they don’t have the monies to participate in hyper-consumerism the buying of things just to be buying and having things.

Then while checking my email, I glimpsed a banner for a news story about how some of the top ten retailers where closing stores, which instantly caught my attention. Could this be another sign that hyper-consumerism was on the decline, that the much vaunted service economy we depend on is now crumbing just as manufacturing with the rust belt did? Will the millenniums and Z Generation be less able to make substantive contributions to society? I decided to check into this and here’s a parcel list of those retailers who are contracting by closing stores:

Sears & Kmart: 43 additional stores

J.C. Penney: 138 stores

Macy’s: 68 stores

Payless ShoeSource:  512 stores and counting

Radio Shack:  1,000 stores with only 70 remaining

Staples:  70 stores

CVS: 70 stores

Neiman Marcus: number not stated

Furthermore, some of the top American retailers may be declaring bankruptcy this year. No doubt, you’ve heard the recent story of how Alfred Angelo Bridal, the national bridal gown retailer, suddenly closed their doors in bankruptcy leaving hundreds of soon to be brides with nothing to wear to their nuptials but what was already in their closets. Not only that, but they would get just a fraction of their money back  and then months or years from now at that!

So what if this is portents of things to come? So what if the youth of America doesn’t have the hyper-consumerism based economy of their parents and grandparents? Well the real question is, what do they have instead? What is in line to replace it? The answer is nothing! No one in the government is working on some alternative, just like 1973 when American manufacturing was fading. It wasn’t until the shock of the oil crisis that our government gave the situation any consideration, and then it was a quicky decision with little to no real consideration (in other words talking points), and certainly no modeling of the consequences from that decision. That time, they sort of lucked out and it’s worked for several decades, but can they luck out again?

And how do I know that no consideration is being given to a possible demise of hyper-consumerism? Because you hear virtually nothing about the obsolete people problem with the displacement of workers by technology. This is a very integral part of today’s economic problems for the millenniums, in that anytime you can reduce the intellectual-skill levels required for a job, you reduce your labor cost. Displacement by technology means that millenniums are less able to make money because machines are doing the better paying work. Without money, their value as consumers diminishes so they are less able to support a hyper-consumerism based economy. Like the washing away of sand under the foundation of a house, there just comes a time when the house can no longer stand.

Without hyper-consumerism  what will become of so many of America’s youth.