Social insecurity. I have a few relatives who are senior citizens. They depend on their Social Security checks. They are very upset. On Tuesday, July 12, President Barack Obama told CBS News that Social Security checks and veterans’ payments could be threatened if Congress doesn't pass legislation to raise the debt ceiling by the August 2 deadline. “I cannot guarantee that those checks go out on August 3 if we haven't resolved this issue, because there may simply not be the money in the coffers to do it,” he said. “This is not just a matter of Social Security checks,” Obama added. “These are veterans’ checks, these are folks on disability and their checks. There are about 70 million checks that go out.” I guess this proves that there really is nothing in the bogus Social Security Trust Fund.
It’s very irresponsible to scare so many people this way. It could certainly exacerbate the soft patch. Millions of people are all likely to hunker down and spend much less during the rest of July fearing that they won’t get their checks in August. They were already hunkering down during the second quarter according to June’s retail sales report. The three-month average of inflation-adjusted retail sales fell 2.5% (saar) compared to the average during the first quarter, when it was unchanged.
Much of the weakness in retail sales over the past three months was in auto sales as a result of the spike in gasoline prices and the shortage of new cars attributable to supply disruptions following Japan’s earthquake. Excluding autos, inflation-adjusted retail sales rose 0.5% (saar) during Q2 compared to a 0.1% downtick during Q1.
Retail sales should pick up in coming months. The average national gasoline pump price fell to $3.57 a gallon over the past seven weeks after peaking at $3.96 during the week of May 18. Initial unemployment claims fell to 405,000 during the week of July 9. That was the lowest reading since mid-April. That week included the 4th of July holiday, which may have depressed claims. On the other hand, Minnesota had approximately 11,500 of their reported initial claims caused by state employees filing due to the state government shutdown. Jobless claims should drop below 400,000 in coming weeks, confirming that the economy may be coming out of the soft patch.