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Mix-Ansicht- Softening economy and delinquent debtors - Cosa, 01.05.2002, 11:19
- Re: looks like a dead-cat-bounce:-) (owt) - tas, 01.05.2002, 14:45
Softening economy and delinquent debtors
Moin,
hier ein kurzer Artikel, dessen Autor die Wirtschaft wieder abgleiten sieht.
<font size="4">Softening economy and delinquent debtors.</font>
By Charlie Minter from Comstock Partners, Inc 05-01-2002
The economic numbers continue to confirm our belief that the post-attack economic bounce is over. The Chicago PMI for April dipped a bit following its surge from November through February. Chain store sales fell 1.7% in the fourth week of April, the largest decline in nearly 17 months, and the seventh drop in the last 10 weeks. The Tokyo-Mitsubishi index declined to its lowest point in 12 weeks, supporting our belief that that there is no pent-up consumer demand. These indicators follow a slew of releases over the past month that point to a definite slowing of the recovery. The Conference Board’s measure of consumer confidence also fell, confirming the drops in the other leading confidence indexes. While we don’t attribute any predictive value to these confidence indicators, they do reflect what consumers see happening in the broad economy. While the majority see the renewed weakness as only a bump in the road to recovery, we believe there is a good chance that this is the harbinger of another dip and a resumption of the recession.
We have been commenting for some time about the dangers of record levels of consumer debt, and there are now some signs that this is having an adverse impact. Credit card delinquency in March rose to its highest rate in almost five years as past due debt amounted to 5.54% of outstanding balances compared to 4.93% a year ago. Charge-offs hit a ten-year high of 6.59% against 4.74% at this time last year. Preliminary data indicate a worsening of the situation in April. Credit card as well as other debt usually drops during recessions as consumers clean out their balance sheets in preparation for renewed spending. This didn’t happen in the current cycle, and as a result the ability of consumers to lead the recovery is severely limited. With business capital expenditures also looking bleak in the period ahead, there is little to spark the economy once the positive inventory swing is over. Investors are likely to find the coming turn of events highly disappointing while an extremely overvalued market looks very toppy, and on the brink of an important breakdown.
Gruss
Cosa
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