15 July 2006

Pork Rinds

Minyanville: "One thing we Americans will never be accused of is self-restraint. Faced with entreaties to “eat all you can eat”, “shop til you drop” and “SuperSize It”, we are powerless to resist…and we’ve got the bloated balance sheets and physiques to prove it. After stuffing ourselves silly over the last few years, however, it appears some of us have finally had enough. The latest retail roundup reinforces what we suspected all along-- the U.S. economy is starting to get a little soft around the middle. Sure, things at the high-end are still quite firm. But our middle-class gut has definitely started to head south. As the nation’s midsection succumbs to gravity and the lower-income ranks begin to swell, mid-tier retailers and dining establishments are feeling the pinch.

After kicking and banging their household ATMs to deliver any cash still trapped inside it appears the jig is finally up. Combing through the Fed’s Commercial Bank Assets release last Friday (must reading for insomniacs) we made a most shocking discovery. Transaction deposits (aka checking accounts) at banks plunged -$30b in one week and are down -8.4% y/y, their lowest level since the last recession. Gee, might this evaporation in deposit balances foreshadow a slowdown in discretionary spending ahead?"

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