Tag Archives: restaurant sales

Silver Demand Shows A Consumer In Trouble

Global demand for silver declined from 2015 to 2016 by 123 million ozs per numbers from the Silver Institute presented in an article on The Daily Coin yesterday.   In fact, for the demand categories primarily driven by the consumer, demand plummeted 125 million ozs, or 15.3%.   Industrial demand for silver increased slightly but this was because of the global expansion in the solar panel industry, primarily in India and China.

The consumer portion of global silver demand is derived from jewelry, coins and bars (investment), silverware and electronics.  The 15.3% plunge in demand reflects the fact that consumer disposable income is drying up.   After making required monthly expenditures – food, mortgage/rent, debt service, healthcare – consumers, especially in the United States, are out of money.

Disappearing disposable income explains only part of the equation.  The illusion of economic improvement in the U.S. was created by debt issuance.   Between Q3 2012 and now, total household debt expanded by $1.38 trillion dollars.  In fact, total household debt is now at an all-time high, driven by auto, student, credit card and personal loans.  The truth is that “discretionary” consumption was fueled by the Fed enabling the average U.S. household to accumulate a record level of debt.

The economy likely hit a wall in late 2016 and is now contracting.   Today’s retail sales report – to the extent that the numbers have any credibility – showed a .4% gain in retail sales for April vs. March.  But these are nominal numbers.   On an inflation-adjusted basis, retail sales declined.

While demand for silver products reflects the fact that the average consumer is out of money, restaurant sales confirm this.   April restaurant sales declined 1% in April and foot traffic into restaurants dropped 3.3%.  This was the 12th month out of the last 13 that restaurant sales fell.  Restaurant sales have dropped five quarters in a row.  The last time a streak like this occurred was 2009-2010.   Sound familiar?

Regardless of what the Fed says in public, the U.S. economy is in trouble.  The illusion of economic growth post-2009 was a product of debt issuance.  Now the consumer – 70% of the economy – has hit a wall with regard to its ability to take on more debt – look out below. In today’s episode of the Shadow of Truth, we review the silver demand numbers and discuss the implications for U.S. and global economy:

The Consumer Is Broke: “Restaurant Sales Worst Since July”

At -1.3 percent, disappointing restaurant sales growth in November was the ninth consecutive month of negative same-store sales; and the worst sales growth since July…Same-store sales for third and fourth quarters, at the end of November, are both -1.1 percent.Black Box Intelligence

That’s the restaurant industry.  Here’s a retail sales report from Dollar General, which would represent about 40-50% income and spending demographic:

Interestingly, we talk to our consumers each and every quarter through panel data as well as we bring them in and talk to them in general and I can tell you as late as mid third quarter, they were telling us that their sentiment – feeling – is even more dire than it was in previous quarters in early 2016  – Dollar General CEO in response to an analyst question on the quarterly earnings conference call.

Granted, DG’s core customer is low-income. However, as more Americans slide into the “low income” segment, it will affect overall retail sales, especially with regard to disposable income. My point here is that, despite the sense of “hope” signaled by the “Trump rally,” in general the average American is not feeling optimistic about the economy and I believe this will translate into a poor holiday season for both retailers and the overall economy. – Short Seller’s Journal, Dec 4 issue

Retail sales this holiday season are going to be abysmal.  Everyone with whom I’ve chatted who’s been out holiday shopping – I mean everyone – has commented on how eerily quiet the stores are this year.

The Census Bureau and the National Retail Federation will issue phony sales reports that will be contradicted by the actual sales reports from and guidance from retailers.  This report written by NY Post editor, John Crudele, outlines the methodology by which the Census Bureau manipulates the monthly retail sales reports:

Halfway down the page is a listing for Health and Personal Care Stores. It had a 7.6 percent increase in October. But underneath that calculation, there are no data, only an asterisk. That’s explained in the footnote to mean “advance estimates are not available for this kind of business.”

So how did Census determine that there was a 7.6 percent increase in Health and Personal Care Stores when the only category listed doesn’t provide data? “Furniture and home furnishing stores” also had a 3.4 percent sales increase. But, again, Census came up with a calculation despite no data.  – John Crudele on October retail sales report

If you pull up the actual retail sales report issued by the Census Bureau, you’ll see that several categories are “asterisked,” meaning the CB imputed its own estimate for October retails sales for that category.  In other words, about half the reported headline number is made up.

Restoration Hardware’s earnings report yesterday is an example.  The stock is down 18% after missing Wall Street’s earnings estimates – badly – and issuing dismal guidance on holiday sales and its outlook for 2017.

The point here is that the average household real disposable income is declining. As such, the average consumer is choking on debt, Obamacare premium increases, and the spiraling cost of everyday living – especially those households with children.

Despite a stock market that is going parabolic and in the final stages of a blow-off top, several of my stock picks in the weekly Short Seller’s Journal have provided profitable trades since August (some have not, to be fair).   One retailer in particular dropped 20% after I presented it in August and is now back up to the price at which I recommended shorting it.  I will be discussing this stock as a great short idea in this week’s issue.  You can access the SSJ using this link:  Short Seller’s Journal.

Payment terms are monthly and you can cancel at any time.  The SSJ issues are weekly and delve in-depth into economic data and analysis that you will not necessarily find on in the mainstream or alternative media.