Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Economic Impact of Super-Storm Sandy and the Electoral Blues Update

Economics / US Economy Nov 27, 2012 - 06:22 AM GMT



Earlier this month we reviewed the impact of Hurricane Sandy and the presidential election on the shopping behavior of American consumers by comparing this year's behavior with what we had observed during the 2008 election campaign. In both cases we witnessed a significant fall-off in consumer demand that was broadly coincidental with the election:

Obviously the comparison is admittedly a little messier than we might have wished, because in 2012 we were experiencing two nearly simultaneous events (Sandy and the election) that could have had a significant impact on consumer activity. That said, the above chart is interesting on a number of levels:

-- On-line consumer demand for discretionary durable goods in 2012 was substantially worse (on a year-over-year basis) than 2008 heading into the weeks prior to the general election -- even though the 2008 election occurred during the very heart of the "Great Recession." The far left part of the above chart pre-dates any plausible impact from Sandy, which was not even rated as a "tropical storm" until October 22nd (Day -15 relative to the election). This decline in consumer demand was hardly unexpected, since the pre-election rhetoric and campaign advertising had given consumers very little reason to feel good about the health of the economy (or their personal income/employment/wealth prospects for the immediate future). Chalk up at least a portion of the year-over-year decline to collateral damage from a very nasty campaign.

-- The chart indicates that the economic distractions of Sandy commenced several days prior to landfall as storm related preparations displaced normal commerce for as many as 10 million households.

-- Post-landfall on-line consumer demand did not return to pre-landfall levels for 10 days. Perhaps as much as 5% of US consumers were without power for several days, meaning that even those fortunate enough to avoid catastrophic property losses were experiencing material interruptions in their normal day-to-day activities.

-- Superimposed upon the decline caused by the storm is the nation-wide impact of the election. Although the lowest readings in 2012 were clearly in the immediate wake of the storm, the post-election pattern of consumer demand in 2012 was strikingly similar to (albeit slightly higher than) the pattern from 2008 -- even including a brief post-election hangover.

-- The post-election behavior of consumers also benefited from the relative proximity of the "Black Friday" kick-off to the holiday shopping season. In 2012 that kick-off occurred at the earliest possible calendar date, whereas in 2008 the same kick-off occurred at nearly the latest possible date. In the above chart the 2012 "Black Friday" level of our Weighted Composite Index ('Weighted Composite Index') can be seen to be a couple of points below the level reached by "Black Friday" in 2008 -- again arguably in the midst of the "Great Recession."

The impact of all of the above on the 4Q-2012 GDP remains to be seen, but it likely does not bode well. So far during the current quarter we are recording real-time year-over-year consumer demand for discretionary durable goods (some 14% of total consumer spending) at an average of about 5% below year earlier levels. And during that year earlier period (4Q-2011) the BEA recorded annualized growth of the "real final sales of domestic product" at a very modest 1.57%. All else being equal, we might expect that the consumer's contribution to the anemic "real final sales" growth rate from a year ago will be halved during 4Q-2012.

Consumer Metrics InstituteTM
Home of Daily Consumer Leading Indicators

© 2012 Copyright Consumer Metrics Institute - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Consumer Metrics Institute Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in