When Will the Next Auto Industry Bailout Occur?

The following chart shows the natural log of annual light auto sales divided by civilian employment. I'm using a natural log so that constant exponential growth (or in this case decay) can be seen as a straight line.


Click to enlarge.

Behold the two trend channel failures. The first was a massive failure to the downside and the next was a massive failure to the upside. Slow and steady recovery my @$$.

And on that note, I'll leave the exact date of the next auto industry bailout as an exercise for the reader. Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

charts employment linear trend failure sarcasm vehicles volatility

The "Driver" of American "Prosperity"

The following chart shows personal income divided by personal consumption expenditures.


Click to enlarge.

No matter how important you think income is, consumption is always more important!

Show of hands: Who thinks this can end well?

January 31, 2014
Consumers spent more than expected last month despite flat incomes

WASHINGTON -- Consumers opened their wallets more than expected last month even though their incomes failed to grow, another indication the economy picked up steam heading into the new year, the Commerce Department said Friday.

Steam power for the win apparently.

Source Data:
St. Louis Fed: Custom Chart

charts employment oil sarcasm vehicles

Real Oil Price: Old Normal vs. New Normal

Click to enlarge.

The Fed wants 2% inflation per year. If real household median income and real household debt per capita can't get us there, then oil will have to do.

Here's the good news. If real household median income starts to fall again, then the Fed may help raise the price of oil to compensate again. In fact, the lower real median income goes, the more help they may offer! Genius!

Put another way, the less you make at work the more it may cost you to get to work! You know, just to balance it out and what not. This is such a great idea. Should give you all the motivation in the world to get paid more.

What label should we use to describe what's going on?

1. Deflation.
2. Inflation.
3. Stagflation.
4. All of the above.

You make the call. As for me, I'm calling it hyperdefstaginflation! We'll need two words to describe what we're feeling as well.

For the optimists: hyperdefstaginfelationed!
For the pessimists: hyperdefstaginfestationed!

As a side note, one can probably deduce the typical feeling based on how little it costs to fill one's gas tank as a percentage of net worth. The closer you are to the top 1%, the more you'll feel hyperdefstaginfelationed! Well, not always. There may be a little bit of whining involved.

January 28, 2014
VC legend Tom Perkins apologizes for comparing attack on rich to holocaust

Perkins told Bloomberg Television that he made the analogy between wealthy Americans and Jews because the rich are a minority, like the Jews who made up just 1 percent of the German population before the Holocaust.

File:If-us-land-mass-were-distributed-like-us-wealth.png (Stephen Ewen)

The 1% minority are being persecuted by that little red dot. Oh the humanity! Although none have lost their lives so far, there's been a great deal of emotional damage. When your net worth is over a billion dollars and you experience even 2% emotional damage, that's tens of millions of dollars! For a 200 pound billionaire, that's easily $6,250 per ounce in tainted self-worth! Don't the poor realize this?

Source Data:
St. Louis Fed: Custom Chart

debt deflation employment fed chairman inflation oil sarcasm stagflation vehicles

A Railroad Productivity Miracle (Musical Tribute)

Click to enlarge.

The data in blue shows the annual inflation adjusted rail transportation corporate profits after tax (left scale, billions of December 2013 dollars).

The data in black shows the number of rail transportation employees (right scale, thousands).

It's almost like each additional boxcar on a train does not require an additional worker.



July 24, 2013
Forget the Google Car. The Future is Robotic Trucks.

Everyone seems rightly focused on the coming Google Car. But there are bigger changes lurking for a critical part of our transportation infrastructure: Trucks. And the 5.7 million Americans who drive them.

Source Data:
St. Louis Fed: Custom Chart

automation charts employment musical tribute stock market vehicles videos

Vehicle Miles Traveled

Click to enlarge.

Once we get through this post-recession soft patch, things are really looking up!

Source Data:
St. Louis Fed: Moving 12-Month Total Vehicle Miles Traveled

charts oil sarcasm vehicles

The Auto Sales to Food Sales Ratio

The following chart shows auto and other motor vehicle sales divided by sales at food and beverage stores and food services and drinking places.


Click to enlarge.

Since this is an illusion of prosperity blog, you can probably guess which "sure thing" seems more likely to me over the long term.

1. When the downward trend in blue failed, it failed to the downside.
2. We have fully recovered back to the trend in blue.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

charts linear trend failure oil vehicles

Sticky Rate Valve

The following chart shows the spread between the 1-year adjustable rate mortgage rate and the 1-year treasury rate.


Click to enlarge.

There's a problem with the "Fed Sir" valve. We 'll need some 3-in-1 oil and some gauze pads. That's in addition to the ball bearings and ten quarts of Quaker State antifreeze of course.



December 20, 2013
‘After Christmas’ Sales Arrive Extra Early This Year — Like Now, Basically

What’s especially interesting is that in some cases, consumers won’t have to wait until after Christmas for the arrival of “after Christmas” sales. In the same way that retailers have messed with the timing of Black Friday sales — which certainly began on Thanksgiving Thursday, and were launched a week earlier by some stores — shoppers can expect to be presented with “after Christmas” deals before Christmas.

The internal consumption engine clearly lacks fuel. How else can one explain a pre-Christmas post-Christmas sale? This could lead to shopping exhaust. Hope it doesn't backfire.

Just know that if the paper is flapping in and out and sucking against the tailpipe any at all, then you have issues with your valves and that they need to be checked out by your local mechanic.

There's plenty of paper flapping and it can definitely suck for some. No doubt about it.

November 26, 2013
6 Ways You Can Beat Someone's Cash Offer When Buying A Home

5. Pay extra. Spending more money to beat a cash offer sounds crazy. But cash buyers nearly always expect a discount from the seller simply because they’re offering cash. As a result, the cash buyer will often make a lower offer. To increase your chances, top the cash offer. If you plan to live in the house for years, and it’s the home of your dreams, paying a bit extra may well be worth it.

Just pay extra! Genius! Since this one is guaranteed to work, forget the other 5 ways! Rates are nominally low but relatively high (see first chart). Prices have already fully recovered to normal pre-bubble levels (real median prices, November 2013 dollars). What could possibly go wrong again?

Speaking of what could possibly go wrong, I was watching the financial news on TV today and they ran a story about a couple who had lost their home. They couldn't afford the payments. Now that very same house is being rented back to them with payments $200 higher. It looks like a really nice house. That said, I might have been tempted to downsize on the off chance that this new and improved economy experiences yet another kick to the gonads at some point, but hey, perhaps that's just me.

Forehead. Desk. Whack. Whack. Whack.

Source Data:
St. Louis Fed: Custom Chart

charts debt housing sarcasm treasuries vehicles videos

Peak U.S. Public Air Transportation Services

Click to enlarge.

I know what you are thinking. Okay, sure. That's definitely a peak. It can't be the ultimate peak though. Our population is growing and the future is so bright I gotta wear shades!

Not so fast. Let's put that same data on a log chart. On a log chart, constant exponential growth is seen as a straight line.


Click to enlarge.

That's not straight. It's curving exactly like a baseball in flight would, and when I say exactly I mean with an r-squared of 0.995.


Click to enlarge.

If the 80+ year long-term trend continues, only the wealthiest among us will be flying in planes someday. How's that for a kick to the long-term prosperity gonads? It isn't just flying either. Driving looks mighty suspect as well. Just doing my part to add some perspective! Sigh.

Despair.com: Perspective

Less is more. Unless you're standing next to the one with more. Then less just looks pathetic.

This post inspired by Rob Dawg who pointed me to a whole new world of FRED quantity indices (in the comments found here).

Source Data:
St. Louis Fed: Public Air Transportation
St. Louis Fed: Public Air Transportation (Natural Log)

charts oil sarcasm vehicles

Hugging the Bottom Hair of the Dog That Bit Us

The following chart shows motor vehicle loans as a percentage of annual wage and salary accruals.


Click to enlarge.

How much debt is too much? We'll find out someday if we keep hugging the bottom of that trend channel.

October 28, 2013
More new-car buyers opt for 7-year loans

More new-car buyers are stretching out their loan payments as long as possible — as many as seven years — and experts wonder if the trend is another financial time bomb.

Source Data:
FRB: Historical Motor Vehicle Loans
St. Louis Fed: Compensation of Employees: Wages & Salary Accruals

charts debt employment sarcasm vehicles

The Future's So Bright I Gotta Rent Tires

June 08, 2013
High prices are driving more motorists to rent tires

Eric Malone, who owns eight RimTyme stores in North Carolina, Virginia and Georgia, was drawn to the business by the high profit potential. RimTyme averages more than $1.4 million a year in sales across its 25 locations, nearly double the take at parent company Rent-a-Center's traditional furniture and electronics stores.

His employees make about three repossessions a week....

debt sarcasm vehicles

U-192

German submarine U-192

During her maiden voyage in May 1943 she disappeared without a trace, along with her 55 crew.

Why don't you knock it off with them negative waves? Why don't you dig how beautiful it is out here? Why don't you say something righteous and hopeful for a change? - Oddball

October 30, 2013
Passenger traffic fairly flat at Port Columbus last month

There were 501,354 passengers in and out of the local airport, an increase of 192, which is less than one-tenth of 1 percent.

For the year so far, the number of passengers is down 3 percent at Port Columbus, a trend that has been noted at airports across the country.

Shouldn't have gone down the negative waves path. Should have said something righteous and hopeful for a change. Perhaps it is not too late.

These 192 extra people will no doubt lead to all sorts of exciting extra retail sales and employment opportunities for the one person with a well positioned food truck! So what if the trend is down at airports across the country! Gotta keep the faith!

employment oil restaurant sarcasm vehicles videos

The Glass Driving Ceiling

Click to enlarge.

A glass driving ceiling is a political term used to describe "the unseen, yet unbreakable barrier that keeps a society from exponentially growing the number of miles driven each year, regardless of population increases and the level of automobile advertising dollars spent."

See Also:
Glass Ceiling

Source Data:
St. Louis Fed; Custom Chart

charts inflation oil sarcasm vehicles

Investment Advice vs. Used Car Advice

The following chart shows how much production and nonsupervisory investment advice employees are earning compared to their used car dealer counterparts.


Click to enlarge.

Forehead. Desk. Whack. Whack. Whack.

Source Data:
BLS: Employment

charts employment sarcasm stock market treasuries vehicles

Lost in America

The following chart shows the 12-month moving average of annualized production and nonsupervisory RV parks and recreational camps employee minutes worked per capita.


Click to enlarge.



Source Data:
BLS: Employment
St. Louis Fed: Population

charts debt employment linear trend failure oil sarcasm vehicles videos

Tired of Malinvestment?

The following chart shows the number of employees at tire dealers divided by annual vehicle miles traveled.


Click to enlarge.

Since the depths of the recession, we've been hiring more and more tire dealer employees. We're seeing no increase in total miles traveled though. Think that's going to be sustainable over the long-term?

If the trend channel in blue represents rising productivity, then what does the trend in red represent? Rose-colored glasses?

Malinvestment

Malinvestment is a concept developed by the Austrian School of economic thought, that refers to investments of firms being badly allocated due to what they assert to be an artificially low cost of credit and an unsustainable increase in money supply, often blamed on a central bank. This concept is central to the Austrian business cycle theory. Austrian economists such as Nobel laureate F. A. Hayek advocate the idea that malinvestment occurs due to the combination of fractional reserve banking and artificially low interest rates misleading relative price signals which eventually necessitate a corrective contraction—a boom followed by a bust.

Based on the chart above, malinvestment at tire dealers seems more than likely to me. Where else do you suppose it is appearing? Or did I just get lucky and think this one up in isolation?

Before you answer, I started with the premise that I would see malinvestment in tire dealers. I then went looking for malinvestment. Being able to include the "tired" pun was just a bonus.

It would not surprise me if this very same malinvestment theory could be applied to retail trade in general. For example, picture retail salespeople and mall traffic. I do not have easy access to reliable mall traffic though, so this chart will have to suffice for now.

Who really believes that malinvestment based growth is sustainable over the long-term? I sure as heck don't.

This is not investment advice.

Source Data:
BLS: Employment
St. Louis Fed: Total Vehicle Miles Traveled

employment exponential trend failure sarcasm stock market vehicles

Vehicle Sales per Civilian Employed

Click to enlarge.

The irresistible force in blue is just about to hit the immovable wall in red.

In my opinion, this "sure thing" growth "driver" is just about over. It's possible that we crash through the wall a bit, but it's not sustainable over the long-term.

October 1, 2013
Auto Sales Fell in September, Hurt by Early Labor Day

“September had only 23 selling days,” said Kurt McNeil, G.M.'s vice president for United States sales operations. “All of this goes a long way in explaining the month-to-month decline” in the annual rate of industrywide sales.

You will note that he said it goes a long way. He did not say it goes the entire way. Go figure.

Source Data:
St. Louis Fed: Custom Chart

charts employment sarcasm vehicles

Long-Term Oil Price Trends

The following chart shows the 5-year, 10-year, and 20-year moving averages of the price of crude oil in inflation adjusted terms (August 2013 dollars).


Click to enlarge.

There is no good news in the 10-year and 20-year moving averages. Both are currently at record highs and climbing.

The only good news here is that the 5-year moving average is rolling over. However, this news is offset by the fact that the current price of oil @ $102.73 is well above the 5-year moving average. Should it stay there then the rolling over will be temporary.

What could cause the 5-year moving average to continue to roll over? A recession brought on by high-priced oil could certainly do it. For the first time in U.S. history (March 2012 to March 2013), the real price of oil averaged more than $90 over a 5-year period (August 2013 Dollars). What a drag.

For what it is worth, nothing tends to kill higher prices like higher prices (most bubble watchers would agree). Note that the perpetually increasing upward trend in total miles driven has failed.

No predictions here, simply observations.

Source Data:
St. Louis Fed: Crude Oil Prices (WTI)
St. Louis Fed: CPI

charts inflation oil vehicles

This "Recovery" Is Just About Over (Musical Tribute)

Click to enlarge.

Start with retail sales. Subtract off motor vehicles and parts (mostly purchased with excess credit), gasoline station sales, food sales, and nonstore retail sales (since nonstores tend to hire non-employees). Adjust for inflation and divide by the population. The chart shows what's left. It's the perfect recipe for MaxedOutMama's disturbing Utterly Schizoid NFIB Report.

In my opinion, the core economy is running out of steam again. They say nobody rings a bell at the top. I guess everyone is just too busy counting their money while they're sitting at the table.



Source Data:
Census: Monthly & Annual Retail Trade
St. Louis Fed: CPI
St. Louis Fed: Population

charts debt employment inflation musical tribute oil restaurant sarcasm stock market vehicles videos

New Car Financing vs. Hours Worked

Click to enlarge.

FAIL.

September 6, 2013
Consumers rely on car financing more than ever

Loans now average $457 with payments over 65 months, putting the average amount financed on a new car at $26,526.

Subprime loans to customers with less than a 680 credit score saw an increase, rising from 25.4 percent of loans last year to 27.5 percent in 2013.

Extending payments past four years, and well beyond the typical new-car bumper-to-bumper warranty, suggests people are buying more car than they can arguably afford.

The future's so bright I gotta wear 27.5% subprime shades!

See Also:
The Illusion of an Auto Industry "Recovery"

Source Data:
St. Louis Fed: Custom Chart

charts debt employment exponential trend failure sarcasm vehicles

Auto Sales vs. Miles Traveled

Click to enlarge.

Oh, yeah. Totally sustainable.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart

charts sarcasm vehicles