What happened? All of the sudden, it looks like some of the green shoots are shriveling.
Foreclosures in April registered a surprise jump. Everyone was thinking they’d abate after March. Tax revenues are in utter free fall, and though the US can keep funding its expenses for a while, we could be days away from a major default or crisis in California. (That is, if Barney Frank can’t guarantee the entire muni market on time).
And then the “engine” of the economy in consumer remains surprisingly stalled. Here’s what Richard Moody of Mission Research said about today’s numbers:
We didn’t expect much from retail sales in April, but we did expect more than this — total retail sales fell by 0.4 per cent, with ex-auto sales falling by 0.5 per cent. Moreover, the March sales data were revised to show larger declines in both headline and ex-auto sales than initially reported. Core retail sales, a direct input into the BEA’s calculation of consumer spending on goods, fell by 0.3 per cent in April, leaving core sales well below their Q1 average. Thus, the bounce in consumer spending in January and February, is now becoming just a fading memory.
Add in a few more factors, like the coming GM bankruptcy (expected to be much more complicated than Chrysler’s), and concerns over spending, and voila, is it any surprise stocks are tanking today?
(photo via Johndal)