Consumer Spending Habits

The Economix blog over at the New York Times has an interesting piece today looking at the consumer spending habits in the last year. Specifically, Kruger looks at the Gallup Daily Tracking poll about a question that was introduced to the poll earlier in the year that asks a consumer about his or her spending habits.

I found a few of conclusions that he drew to be fascinating and revealing:

  1. People spend about 32 percent more on Fridays and Saturdays than on other days of the week, probably because they receive their paychecks on Fridays and have time to shop on Saturdays.
  2. Daily data on consumption can be related to stock market movements. Today’s spending is unrelated to today’s movement in the S.&P. 500, but is related to movements in the stock market over the last seven trading days. A 10 percent drop in the S.&P. 500 in the preceding week is associated with about a 10 percent drop in consumer spending today.
  3. The Gallup data show a declining trend in spending since May 2008, and this decline accelerated in early November.
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Failed Financial Institutions

Here’s a roll up of the current set of Wall Street failures and the aftermath. Thought I’d be amusing to put them in one place.

  • WAMU – bankrupt, filed for FDIC protection, accounts bought by JPM
  • Bear Stearns – sold to JPM with the backing of the Fed
  • A.I.G. – propped up by the Fed under a special loan program
  • Freddie Mac & Fannie Mae – under Federal conservatorship
  • Lehman Brothers – filed for bankruptcy, most assets bought by Barclays
  • Countrywide Financial – picked up by Bank of America right before it fell apart
  • Merrill Lynch – picked up by Bank of America in anticipation of Merrill’s collapse
  • Fortis – nationalized by Belgium, Luxembourg, and the Netherlands
  • Wachovia – first bought with an FDIC guarantee by Citi, but it looks like Wells Fargo is going to get it

I’m sure there are a few I’m missing in here, but ouch, that’s a lot of death and destruction.

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Federal Ownership

In the NYT piece today, David Leonhardt covers a bunch of Q&A on the latest round of government bail outs. This one seemed particularly interesting.

Fannie and Freddie are in a conservatorship; the government clearly controls them. A small part of the assets of Bear Stearns are owned outright by the Fed; it controls them.

The A.I.G. situation is a bit more complicated. It’s still a private company, not one technically controlled by the federal government. But the Fed does have the ability, clearly, to veto dividends, among other things.

And I think it’s safe to assume that the Fed also has a significant degree of power that hasn’t been fully spelled out. After all, the chief executive of A.I.G., Robert B. Willumstad, stepped down at the request of the Treasury secretary, Henry M. Paulson Jr. That may have been a request that Mr. Willumstad couldn’t refuse.


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Jobs that Pay

From an article on CNN, and kind of a follow up to my post on What America Earns, here are a list of jobs that pay over $20/hour.

  • Casino gaming supervisors
  • Health educators
  • Subway and streetcar operators
  • Respiratory therapists
  • Curators
  • Cartographers
  • Multimedia artists and animators
  • Arbitrators
  • Urban and regional planners
  • Loan officers

I found it a bit surprising that jobs such as cartographers still exist (where’s the haberdasher, then?).

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What America Earns

Forbes has a piece on the 25 worst paying jobs in America. I pulled out any occupation that had over 500,000 people employed in it.

  • Food prep (kitchen) with cooking: 2.4 million employed, earning $15.9k
  • Fast food cooks: 600k employed, earning $15.9k
  • Dishwashers: 502k employed, earning $16.1k
  • Counter attendants working at cafeteria, food concession and coffee shop: 524k employed, earning $16.9k
  • Waiters/waitresses: 2.3 million employed, earning $17.1k
  • Cashiers: 3.4 million employed, earning $17.9k
  • Personal and home care aides: 578k employed, earning$18.1k
  • Food prep (without cooking): 871k employed, earning $18.4k
  • Maids and housekeeping cleaners: 900k employed, earning$18.7k
  • Child care workers: 572k employed, earning $18.8k

That’s stunning. Back of the envelope math basically says 12.7 million Americans (people you see and interact with every day) are earning roughly $18,000 a year. That’s roughly 5% of people living on $1,500 a month. The total count didn’t include the other 15 professions that had less than half a million people employed.

After digesting that, look at the article, as it describes the top 25 earning professions and you’ll see how drastic the wealth divide in our country really is.

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Economic Stimulus

While the country is pondering a stimulus package for the economy, here’s an article from Time dated Dec 2, 1929 which details the plans of various Captains of Industry to bootstrap the then moribund economy. I also love how classicly written the article is, in a language we woudn’t hear any more these days.

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