THE BASIS POINT

Fundamentals 8/9: Consumer Was Improving Just Before Downgrade (CHART)

Productivity and Costs
-2Q2011 Worker Productivity (GDP/hour worked) down 0.3% (annualized)
Full report
-2Q2011 unit labor costs in nonfarm businesses up 2.2%
-Graph below: Worker Productivity (grey bars), Unit Labor Cost (solid blue line)
Worker Productivity and Unit Labor Cost

Consumer Metrics
This is presented here because the computerized nature of this makes it almost real time. This is a chart of the Absolute Demand Index for online discretionary spending. The rightmost point is this past Sunday (2 days ago). What is interesting is that ther early indicator from Consumer Metrics shows that consumer spending was picking up notably just before the S&P downgrade. The fact is this: what the consumer is doing is more important by a factor of 10 that what the Fed is doing. Will the consumer get spooked by the S&P downgrade and yesterday’s equity selloff? Stay tuned.
Consumer Metrics Absolute Demand Index

NFIB Small Business Optimism Index
This index was down for the 5th consecutive month. This index is the result of a monthly survey by National Federation of Independent Business and it should be a leading indicator for jobs.

Retail Sales
ICSC-Goldman Week/Week: -0.5%
Store Sales Year/Year: +3.6%
Redbook Store Sales Year/Year: +4.8%