If you happen to be shorting the markets, especially the retail sector, you may one to consider that the Treasury Flooded Consumers With Money In December, Just In Time To Unleash Holiday Shopping “Animal Spirits”.
In previous articles we discussed the 2009 Holiday Shopping season and forecast dismal results. Trend forecaster Gerald Celente had a similar assessment and suggested that a Christmas Crash would hit around holiday time or shortly thereafter once retail sales were released.
But what if there was a way that the government could directly stimulate retail buying, throwing all of the doom and gloom retail forecasts under the bus?
It may still turn out that the retail sales numbers were horrible compared with 2008, but it seems that the Treasury Department’s machinations may have provided a boost to retailers this year:
When you have your back against the wall, and the only thing at your disposal is the Fed’s money printer on loan, what do you do? Well, if you are the Treasury, you let money rain. Literally. In December, according to the Financial Management Service, the US Treasury dispensed a stunning 69.5% more in Social Security Outlays and Unemployment Insurance on a year over year basis: the administration knew all too well it could not afford to let this holiday season go to waste. So, after averaging at $43.6 billion in monthly outlays, Social Security withdrawals from the UST surged by a unprecedented 48.6% in December to a whopping $69.5 billion. This is not a volatile or seasonal series.
Combine the previously discussed abnormal spike in unemployment insurance, and you get the following chart:
On a month-over-month percentage change basis, the combined December number is stunning: a 69.5% increase in Treasury spending to boost consumption no matter what the price.
So when everyone is discussing the amazing holiday retail season (which wasn’t really that amazing, and was just a little over a 1% improvement compared to last year), will anyone take the time to normalize for monthly “stimuli” in the form of excess SSN and Unemployment payments?
source: Zero Hedge
The US government is literally giving money away to keep the game going. How long it will last, no one really knows. But eventually, someone is going to realize we can’t pay all of this back, and when that day comes, it will be game over.
The retail sales numbers and earnings reports for the fourth quarter of 2009 should be quite interesting. It could go either way.