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Howard Davidowitz: Consumers In TERRIBLE Shape and “It’s Going to Get Worse” (Reprise)

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Weak data on November retail sales and an earnings miss from Best Buy on Tuesday poured ice-cold water on the whole "strong holiday shopping season" meme.

All the upbeat commentary about Black Friday, Cyber Monday and the like was always specious, according to Howard Davidowitz, CEO of Davidowitz and Associates. Like Barry Ritholtz, Davidowitz says Black Friday data, particularly, can't be trusted and is annually hyped by the retail industry to encourage consumers to get out and spend. (See: Fact or Fiction: Is the Consumer Back?)

In his own inimitable style, Davidowitz explains why the consumer is in "terrible shape" and why "it's going to get worse," citing the following:

  • Crushing Debt Load: Consumer debt is 117% of disposable income.
  • Help Not Wanted: Even November's "strong" report included more people dropping out of the labor pool (315,000) vs. those who found work (278,000), according to the Labor Department's household survey.
  • Reverse Wealth Effect: Household net worth fell 4% in the third quarter, a drop of $2.4 trillion, according to the Fed. That's the biggest drop since 2008 and would be hard to overcome even if wages were rising sharply, which they're most certainly not.
  • Housing Bust Rolls On: Residential housing remains depressed, which is putting tremendous pressure on Americans' net worth and sense of financial confidence. Davidowitz, among others, sees more downside for housing prices and another increase in foreclosures in 2012.

Longtime viewers will note "it's going to get worse" is a familiar refrain for Davidowitz, going back to at least 2009. (See: "The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention)

In the accompanying video, I asked what it would take for him to feel like things are getting better. As he's wont to do with most subjects, Davidowitz answered that question with a stinging critique of President Obama. (See: "The Worst President in My Lifetime": Howard Davidowitz on Obama)

Barring a Supreme Court ruling that Obamacare is unconstitutional and/or victory in November by any "sensible" Republican -- Davidowitz thinks both Mitt Romney and Newt Gingrich qualify -- there isn't much about 2012 he's looking forward to, as you'll see in the accompanying video.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com

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