Isn't looking good at the pump either---- Gasoline Use and NFIB Survey Still Recessionary By DoctoRx, on January 11th, 2012

Isn't looking good at the pump either----

Gasoline Use and NFIB Survey Still Recessionary

By DoctoRx, on January 11th, 2012

Is the rising stock market correctly foreshadowing economic growth of a muddle-through nature with “risks” skewed to the upside?  The latest MasterCard gasoline usage data casts doubt that much has been happening in that regard in a Bloomberg.com article titled U.S. Gasoline Use Sinks 14% to Seven-Year Low, MasterCard Says:

Fuel use fell below a year earlier for the 18th consecutive time last week, slipping 3 percent from 2010 levels. Fuel demand over the previous four weeks was 3.4 percent below a year earlier, the 41st consecutive decline in that measure…

Gasoline consumption in 2011 fell 1.6 percent from 2010, according to the second-biggest payments network company.

It is hard to see that if the average year-to-year drop last year was “only” 1.6% (which is almost 2.5% on a per capita basis), and lately the yoy decline has been closer to 4%, that there is any sign of improving economic growth.  I fear that in general, headline readers are more reassured than those who read an entire press release.  Consider the latest NFIB release.  Here is the headline:  Small Business Optimism Up Again in December – Small Business Confidence Rises for 4th Consecutive Month.  This sounds pretty good, but here are some relevant details:

Reports of positive earnings trends were 6 points better in December at a net negative 22 percent of all owners.  The improvement in retail sales gave some owners a needed boost. Not seasonally adjusted, 16 percent reported profits higher (up 2 points), and 37 percent reported profits falling (down 3 points). Still, profits showed a dismal performance historically.

Sales remain a problem for many small businesses. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months gained 4 points, rising to a net negative 7 percent, which means that there are still more firms with sales trending down than those who are seeing their sales trend upward.

However, expectations for future sales have improved, with the net percent of owners expecting higher real sales. This indicator gained 5 points in December, for a net 9 percent of all owners (seasonally adjusted). December’s increase builds on the 8 point improvement in November, but remains 4 points below January 2011’s reading. Not seasonally adjusted, 25 percent expect improvement over the next three months (up 1 point) and 34 percent expect declines (down 5 points).

Of course, not every economic data point is this negative, but even the respondents’ expectations for future sales are more negative than positive.  Note that despite ongoing price inflation, these actual and expected sales results are in nominal, not “real”, dollars.  No amount of explaining that NFIB members are somewhat more skewed to construction and retail than the average for all American industry can change the fact that in the real world, with an unknowable future, NFIB’s respondents are precisely in line with every survey I have seen from Gallup, Bloomberg Consumer Comfort, Discover/Rasmussen, etc., that in the real world, the “Great Recession” never ended.

All that said, the future appears to be clear in some ways.  It is following the trend that I read in or around 2000, which was to the effect that the vastly greater U.S. GDP in 2000 weighed the same as a century earlier.  One can simply take a look at what you are doing, namely reading this over the Internet, or think about all the high value, nearly weightless biotech drugs and medical diagnostics, to see the validity of this trend.  To the extent I am long any conventional stocks, it is along that theme:  long high-value per ounce stuff.