The Lemon Fool

I was amazed to see Wickes offering a 15% off sale over Easter, something I don't recall seeing.

Meanwhile sales at my little cosmetic business have dropped off hugely, one of the folk who runs the local guide dog association tells me donations have dried up, another who saves hedgehogs has similar comments.

A neighbour trying to sell a house has had one offer, since withdrawn, his largest renter of his units has given notice of leaving.

The local supermarket has had to discount larger stocks of Easter chocolates, hot cross buns etc than I recall seeing in a long time.

Are these just events unique to me & meaningless in the bigger picture, or is the economy slowing?

I would be interested in others experience.

Regards,

odysseus2000 wrote:Are these just events unique to me & meaningless in the bigger picture, or is the economy slowing?

Have a read of these three brief commentaries, listed in the chronological order they were written over a 4 week period in March:

UK money trends suggesting "stagflation"
http://moneymovesmarkets.com/journal/20 ... ation.html

UK Q4 GDP strength fading in Q1
http://moneymovesmarkets.com/journal/20 ... in-q1.html

UK real money squeeze suggesting late 2017 weakness
http://moneymovesmarkets.com/journal/20 ... kness.html

NB these aren't cherry-picked articles chosen to support your possible narrative but are instead just the last three UK-focused comments he's published.

Ward's analysis is interesting, but I am not sure it ties that well together.

e.g. in the 3rd article he talks about stagflation having earlier said that house hold spending is declining. Whether one can have inflation if folk are not spending seems like a strange idea to at least to me.

One of the problems with Ward's type of analysis is that one is trying to make out things with very small changes on top of very large and slowly moving variables leading to deductions that are susceptible to being influenced by noise in the under lying variable.

Sometimes PMI data is more useful, but that too has its issues, not least in the accuracy of the reports by folk who are often very busy and have little time to make sure what they are reporting is accurate and which are often influenced by how the person feels about his/her business which may have many one off factors in the calculus.

Still however, one looks at this data and my own experience and observation it is hard to be bullish for the economy or equity markets given the data and the geopolitical outlook. However, one can't fall asleep at the wheel as things can change very rapidly.

Regards,

odysseus2000 wrote:Whether one can have inflation if folk are not spending seems like a strange idea to at least to me.

This inflation is imported, courtesy of the fall in the value of Sterling post Brexit vote.

Recently I have been thinking that all is not rosy for the future, particularly for the consumer driven elements of the domestic economy. My existing electric and gas deal has just expired and prices seem to have jumped since I last renewed 12 months ago. Car insurance seems to be increasing at a rapid rate of knots. The weekly food shop is getting pricier mostly I suspect with the growing impact of the weaker pound. Add to this the level of consumer debt that we are carrying, particularly car loans which I read are running completely out of control. Holidays will all be more expensive this year as we all seem to go abroad nowadays for at least the main holiday.

This could all point to a growing economy if it was being matched by wage increases, yet nobody I know seems to be getting anything other than paltry sub inflation rises. So I wonder if we are walking into a squeeze on the consumer with a corresponding reduction in overall spending power and a general slowdown for the domestic economy. Or can the weaker pound somehow balance all this if exports grow, and tourists all flock in? And as I travel around the country, I get the distinct impression that everybody is looking poorer, and both the gap between the haves and have nots, and the number of have nots, are both increasing.

Somehow I feel bearish overall but perhaps I'm just grumpy.

Genou

This inflation is imported, courtesy of the fall in the value of Sterling post Brexit vote.

Price increases can certainly be imported, but to get inflation you need too much money chasing too few goods.

As I see it there are plenty of goods, but folk, at least in my experience, are not spending, which to me is more deflation (too little money chasing too many goods) than inflation.

The WIckes sale I mentioned in the opening post is the typical reaction of a retailer to deflation: cut prices to move stock and get more cash on the balance sheet.

Regards,

odysseus2000 wrote:The local supermarket has had to discount larger stocks of ... hot cross buns etc than I recall seeing in a long time.

That's easily explained. There's been a supermarket fashion this year for heavy, lumpish, hot cross buns. No wonder people wouldn't buy them.

Not to mention that there are lots of heavy lumpish people trying to lose their heavy lumps. Hence the slowdown in consumer spending.

There needs to be a concerted campaign to improve our economy: FAT IS FAB!

When the Q1 GDP growth figures came in a bit weak, I thought maybe that was just normal, people cutting back a bit after spending at Christmas/new year, and no Easter during Q1 this year to help the figures.
But now May has called an election, maybe the Tories think there is going to be a recession sometime in the next year or two, so they want to get the election in before then?

Steadyaim
But now May has called an election, maybe the Tories think there is going to be a recession sometime in the next year or two, so they want to get the election in before then?

Kind of feel that calling the election, even if the opinion polls do give May a huge lead, will not have helped sentiment and in my small business endeavours we are seeing a dramatic fall in the purchase of luxury goods, while an acquaintance who raises money for guide dogs took £2.50 in a whole day at a show when normally they would take many times that. Another acquaintance can't sell his house which he was confident would go by Easter at the latest, another nearby is similarly not selling, but a third one did.

There is also a political offensive by many folk in Europe to get good terms for them in the divorce which is leading to all kinds of very wild calls and predictions, none of which, even if proved rubbish are helping the economy.

Additionally, as already mentioned on this thread, folk are facing rises in overheads like utilities, telecommunications, insurance and in my local supermarkets many consumables such as meat, that are well above the pay rises they have been getting.

It feels to me like an old fashioned squeeze of resources making folk feel poorer and causing them to spend less and thence bring on a recession. One can argue that May et al would like a recession soon so that it can be over when they next have to get votes.

Regards,