FedUpUSA

Archive for April 23rd, 2010

Greece Welcomes Its New IMF Overlords With Day Of Rioting And National Strikes

Submitted by Tyler Durden

What do you do when you are the prime minister of a bankrupt country and your only recourse is to get the Washington D.C.-based IMF to come in and tell you you have to cut wages by about 120% and fire 75% of the country (especially after the same Germans you recently demanded WWII reparations from, mysteriously have decided in the eleventh hour to have their last laugh at your expense). Why, you send in the national guard, armed with fake six-pack ridged bulletproof vests and gas masks, to repeat the miracle of Thermopylae against the marauding population which has suddenly realized that the past 10 years of chimeric happiness were a one-time miracle thanks to Mr Goldman and fat, and somewhat stupid, uncle Almunia. The next thing you do, once you realize you are about to have a [revolution|uprising|civil war] is to declare a moratorium on your €300 billion of debt, make your people happy and stick it precisely to the same bankers that you complain about every single day for “speculating” against you. Tomorrow Greece will face the trifecta of a much delayed hangover as 1) its bonds hit 9% as the hedge funds who have been buying up in expectations of a snapback capitulate, 2) EuroStat declares its deficit was officially 14%, and 3) a Greek civil servant strike in their fourth national walkout this year. 

Bloomberg reports.

The strike will shutter hospital and schools and also affect ministries and government offices, according to an e- mailed statement from Athens-based ADEDY, the umbrella group for more than 500,000 state workers. It will hold a rally in central Athens at 11 a.m. local time.

Greek Prime Minister George Papandreou is under fire from voters who say his austerity measures have gone too far and from investors who argue that further action is needed to cut the EU’s largest budget deficit. As Greece meets EU and International Monetary Fund officials to agree on the conditions tied to any loan, the extra yield investors demand to hold Greek debt over German bonds has surged to a record 522 basis points.

“Papandreou is caught between a rock and a hard place,” said Jacques Cailloux, chief European Economist at Royal Bank of Scotland Group Plc. “The market has zero confidence in what the Greeks are saying, and any further austerity measures pushed for by the IMF could be the ones that break the camel’s back if they are deemed unfair by the population. He doesn’t have any option though.”

Today’s strike isn’t expected to affect public transport or air traffic, after air-traffic controllers postponed a planned walkout to clear a backlog of flights caused by the spread of volcanic ash from Iceland across Europe.

PAME Hellas, a union affiliated with the Greek Communist Party, called its own labor action. Members of the group blockaded entry to the port of Piraeus yesterday, preventing ferries from sailing. Others picketed luxury hotels in the city center, including at least one where IMF negotiators are staying.

“We must dare, otherwise we will be led like lambs to the slaughter,” said Aleka Papariga, head of the Communist Party of Greece, the third-largest parliamentary party. “The working people aren’t about to be used to allow passage of policies that will bring the worst barbarity we’ve seen in the past 35 years.”

That’s funny, cause America recently allowed passage of policies that would make Greek debt-to-GDP ratios seems like a midget in Liliput compared to the monster our own Treasury is about to spawn. Yet, as always, it isn’t until it is far too late to fix something proactively that the people of any country, be it Greece or the US, wake up from their deep slumber. Greece has now officially woken up (we will show you footage of tomorrow’s hopefully non-violent riots to confirm). We wonder how long before America does the same.

h/t Rodrigo

Is the US Facing a Cash Crunch?

By Gordon T. Long

The US cash-management challenge is significant, and any surprises or further delays in economic rebound will likely trigger serious market reactions.

Editor’s Note: Gordon Long is a former senior group executive with IBM and Motorola, a principal in a high tech public start-up, and founder of a private venture capital fund. He is presently involved in private equity placements internationally along with proprietary trading involving the development and application of Chaos Theory and Mandelbrot Generator algorithms. For the full version of this article, click here.

The US government is caught in a cash vise and is being squeezed between too slow a rebound in tax revenues and the limitations on how quickly it can realistically take its funding requirements to the US Treasury auction. The US Treasury was saved in March by what the government reports as “proprietary receipts.” Those receipts require an explanation that isn’t well publicized since it begs the question of what happens next month without the $117 billion journal entry.

The March cash management numbers from the US Treasury’s Financial Management Service are alarming and in my estimation have become perilous. The economy is simply taking much too long to recover, which is affecting urgently required tax receipts.

If the US Treasury issues even higher debt supply to the market too fast, it threatens driving up interest rates prematurely and thereby elevating already strained government financing costs despite already increased supply. Since the US government has steadily reduced maturity duration over the last few years to obfuscate a growing debt problem, the issue is compounded by the rapidly increasing levels of rollover funding now additionally being required.

It’s a tricky balance between gauging how fast tax receipts will return and what supply the monthly Treasury auction is able to absorb. Cash flow is the primary reason small businesses fail unexpectedly. This is also why sovereign governments fail abruptly.

We witnessed in Greece what happens when investors get nervous. Yields not only spike but typically move to even higher levels than most originally thought possible.

US Treasury Cash Requirements

On April 14 the Financial Management Service, a bureau of the US Department of the Treasury, released its Monthly Treasury Statement for March 2010. I was waiting for it because of what I saw in February: The gap between receipts and outlays was widening disturbingly.

I knew the US Treasury was going to have to pull a rabbit out of a hat, or we might see a similar scare in the US Treasury auction, with a spike in treasury yields that occurred in Greece. What was reported was a mystery and for those that read Extend & Pretend: Gaming the US Tax Payer, I’ll call this Suspicious Clue #8.

Suspicious Clue #8

The report shows US Treasury receipts were down disturbingly and almost all government outlays were up. I personally have had Profit & Loss responsibility on numerous occasions during my career and I would have been apprehensive facing the auditors or board of directors with such a blatant example of mismanagement. Absolutely no cuts in expenses, with falling revenues, all made to marginally appear better than the February report by a single line item called “other.” Executives get fired for such a report but governments just carry on until the inevitable crisis event finally occurs. Then the traditional blame game begins, blame is assigned and belated and poorly formulated policy responses are enacted.

So what is this “other”? When you examine the Outlay Ledger of the Department of the Treasury for March 2010 (below), you see it to be a one-time item classified as a negative outlay. For the non accountants, this is a government receipt that is placed in the outlays as a negative amount, thereby showing government outlays to be smaller than they otherwise would have been. Though this is acceptable accounting, it would lead to the wrong conclusions, unless you read the details buried in the back pages. This “other” is referred to as a “Proprietary Receipt from the Public.”

An IRS document explains just what that means in an accounting context (source: 04-13-10 The Incredible Shrinking Deficit Salon.com):
 

Proprietary Receipts from the Public are collections from outside the Government that are deposited in receipt accounts that arise as a result of the Government’s business-type or market-oriented activities. Among these are interest received, proceeds from the sale of property and products, charges for non-regulatory services, and rents and royalties.

This is a $117.3 billion amount! The total 2010 US tax receipts for US corporations is only budgeted to be $157 billion!

My investigations suggest that it’s likely TARP (Troubled Asset Relief Program) money being returned to the US Treasury, along with a slowdown in TARP issuance versus budget. Assuming this is the case, and not simply an aircraft carrier or two we’ve sold and are now leasing back like California is doing with all state-owned buildings, we still have a major problem. What happens next month? The TARP fund returns will stop or we will run out of aircraft carriers. Is unemployment going to surge or are corporate tax receipts going to expand by over $117 billion next month?

Timothy Geithner and the US Treasury somehow dodged the bullet because of “other” this month. How does it look for next month for cash management? Let’s consider tax receipts to see if there is a possible rabbit in the hat there.

Tax Receipts

You personally met your April 15 tax filing deadline and you likely took some consolation in your tax frustrations by knowing you weren’t alone. The quiet truth is you’re becoming more alone each year if you haven’t understood the new realities of the US tax game. Forty-seven percent of Americans (source: Nearly Half of US Households Escape Fed Income Tax – AP) and two-thirds of US corporations (source: 04-11-04 Most US Firms Paid No Income Taxes in ’90s – Boston Globe) will pay no taxes in 2010. Where do you fit? These are pretty startling revelations to most of us and don’t bode well to fixing the monthly Treasury cash requirements quickly, especially with unemployment still stubbornly elevated.

Personal Income Tax

The Associated Press reported on April 7, 2010:

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

Example

The family was entitled to a standard deduction of $11,400 and four personal exemptions of $3,650 apiece, leaving a taxable income of $24,000. The federal income tax on $24,000 is $2,769. With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly. The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax. That ought to take the sting out of April 15.

With the government presently talking about once again extending unemployment benefits, it appears we have more downside than upside on the income tax revenue receipt line item going forward.

Corporate Tax

The Center for American Progress reported in 2004, while fighting President George W Bush’s further cuts in corporate taxation:
 

The news that more than 60 percent of US corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 — the lowest since 1983 and the second-lowest rate since 1934 — is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years. The General Accounting Office (GAO) report also found that an astonishing 94 percent of corporations reported tax liability of less than 5 percent of their total income during the same time period.

The last special General Accounting Office (GAO) study concerning corporate taxation was in 2004 and it showed:

The corporate income tax rate is ostensibly 35 percent, but companies are able to reduce their effective burden by claiming various deductions and credits. US companies paid an average of $11.88 (1.19 percent) in corporate taxes for every $1,000 in gross receipts, the study said.

Foreign-owned companies fared better in some respects than their US-based competitors. The report found that 71 percent of foreign-controlled corporations paid no taxes on their US income, while 89 percent had liabilities of less than 5 percent of their income.

The GAO didn’t attempt to determine why so many companies were able to avoid paying taxes. It said possible explanations included legitimate deductions for current-year operating losses, losses carried forward from previous years, and sufficient credits to offset any tax liabilities. In addition, it said improper pricing of transactions between US and foreign operations could contribute to tax avoidance.

The percentage of federal tax collections paid by corporations has tumbled from a high of 39.8 percent in 1943 to a low of 7.4 percent last year. It ranged from 10 percent to 11 percent in 1996-2000, the period studied by the GAO. (Boston Globe 04-11-04)

In 2005 the GAO issued another report. The Washington Post’s analysis in “Many Firms Didn’t Pay Taxes” highlighted:
 

About two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005. In 2005, after collectively making $2.5 trillion in sales, corporations gave a variety of reasons on their tax returns to account for the absence of taxable revenue. The most frequently listed included the cost of producing their goods, salary expenses and interest payments on their debt, the report said. The GAO did not analyze whether the firms had profits that should have been taxed.

Sen. Byron L. Dorgan (D-N.D.) called the findings “a shocking indictment of the current tax system.”

“It’s shameful that so many corporations make big profits and pay nothing to support our country,” he said. “The tax system that allows this wholesale tax avoidance is an embarrassment and unfair to hardworking Americans who pay their fair share of taxes. We need to plug these tax loopholes and put these corporations back on the tax rolls.”

Eric Toder, a senior fellow at the Urban Institute, said the vast majority of corporations are small businesses and start-ups that have adopted a corporate structure that allows them to lower their tax bills.

“I’m not trying to imply that there aren’t tax-compliance issues among small corporations,” he said. “But when you are talking about businesses that size, I would suspect the norm would be to not pay taxes, and there’s nothing nefarious about that.” Toder had not yet seen the GAO study.

A greater proportion of large corporations pay taxes, according to the GAO. In 2005, about 28 percent of large corporations paid no taxes. Of the 1.3 million corporations included in the study, 998 were categorized as “large.”

Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using “transfer pricing” to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates.

The GAO said data on transfer pricing were scarce. Instead, it compared the percentages of foreign- and U.S.-controlled corporations that are paying taxes.

In general, the GAO found that slightly more foreign firms paid no taxes. From 1998 to 2005, 68 percent of foreign-controlled corporations sent nothing to the Internal Revenue Service, compared with 66 percent of U.S. companies. The report noted in an opening paragraph, however, that the GAO did not study whether the foreign companies were using transfer pricing.

Still, Levin said: “This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.”

It’s only become worse, with President George W. Bush tax cuts and corporate-friendly tax policy. President Barack Obama has been too preoccupied with spending to consider revenue receipts as a priority.

Additionally, offshore tax accounting is completely un-policed and highly secretive with approximately 30 countries serving as tax havens to help corporations avoid taxes. The addition of $605 trillion derivatives market now makes it almost impossible to police global corporations from tax avoidance.

Below is the current Federal Reserve’s Tax Receipts on Corporate Income where I have added the budget expectation for 2010 of $156.7B. As you have already seen, we are presently falling behind last year’s rate of tax receipts.

When we compare corporate tax receipts to Nominal GDP we see huge disparities that are now built into the US Corporate Taxation policy. When GDP was growing, US Taxation wasn’t. The effective rates after loopholes and offshore accounting created the following results.

A Horrific Chart

This alarming chart suggests one or more of three possibilities:

1. There’s no relationship between corporate taxes and GDP.

2. Corporate pretax profits have seen near exponential growth over the last 30 years without being reflected in US taxes receipts.

3. Pretax corporate profits have become more and more an offshore phenomenon.
 

In an analysis of taxes paid by 275 of the largest U.S. corporations, the liberal watchdog group Citizens for Tax Justice found that effective corporate tax rates have fallen by 20 percent since 2001, even as pretax profits jumped 26 percent. Between 2001 and 2003, the 275 companies paid taxes totaling 18.4 percent on their total profits, about half the 35 percent corporate income tax rate. Of the 275, 82 either paid no taxes or received large refunds in at least one of the past three years. (The Washington Post 12-26-04)

Investors are operating under the notion that an improvement in the economy and employment will alleviate the pressures on the Treasury auction. This notion I believe is misplaced. Though I’m skeptical about significant improvements in either the economy or employment, this view is moot in comparison to what will actually be required to make a material difference to tax receipts. The problems described above are intractable without major congressional policy initiatives. Congress is presently doing nothing to address them. In fact they’re headed in absolutely the opposite direction.

Corporate and personal taxes aren’t going to materially fix the US cash crunch short-term.

So the question is even more difficult to answer. Where will tax receipts come from to keep the US Treasury from being forced to place accelerating supply on the monthly Treasury auction?

Debt Issuance

I know many of you are saying we’ll just be forced to place more supply on the Treasury auction and accept higher rates. As I mentioned earlier, the US has already moved down the duration curve steadily over the last few years to make increasing debt levels less onerous. It obviously comes with huge risk, considering interest rates are at all-time historic lows.

If we were forced to refinance the national debt at 5.5% versus the present average maturity of just over 2%, we’d have a serious problem. We need to place corporate tax receipts versus interest payment rate charges in perspective.

This is too far out to be critical to our monthly cash management concerns, but is still a major strategic consideration affecting short-term US Treasury auction options. Closer in however, the US Treasury is obviously caught in a vise about not pushing rates up any faster than absolutely necessary for concern that in the not-too-distant future the very existence of the US and its ability to service its debt may be at stake.

Conclusion

The US cash-management challenge is significant. Taking out this month’s “plug” number, any surprises or further delays in economic rebound will likely trigger serious market reactions.

“This story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics.”
– Moody’s Investor Services

FedUpUSA has been working hard for almost three years to expose the corruption and fraud in the financial industry and in our government, but what is being proposed right now does nothing to further that goal.

Americans for Prosperity put this out today:

Vote No On The So-Called ‘Financial Reform Bill’:

Bank stocks went up after Obama’s so-called financial reform speech.  That’s probably because his bill institutionalizes “too big to fail.”  It doesn’t break up the banks and it assures them access to Federal Reserve loans as needed.  It makes bailouts permanent.

 

The Goldman Sachs scandal exposes a deep flaw in the bill that we believe can generate enough public outrage to stop this bill – if we can educate people quickly.

 

This video lays it out clearly.

The Securities and Exchange Commission is investigating whether Goldman acted improperly, but there is no investigation into the left-wing Center for Responsible Lending, which facilitated both the creation of the subprime bubble and its collapse, while CRL’s major donors (John Paulson, Herb and Marion Sandler, and George Soros) made a fortune.

 

Please fill out the form below to tell Congress to vote NO on the fake reform bill and to demand a full investigation into the scandal.

CLICK TO TAKE ACTION:

E-mails From Mordor

How Safe Is Your Bank? Texas Ratios of 7,500+ Banks

In March I posted an Interactive Map of Worst Banks in the U.S. by Texas Ratio, Non-Performing Assets, and Total Capital.

Today I have data for every bank in the report, over 7,500 banks. There are so many banks in the list, an interactive map is not possible.

This display contains a lot of data and it may take extra time to load. Please be patient. It takes an extra 3-5 seconds on my computer. Your results may vary. If you have an inadequate memory, the display may be slow or inoperable.

CLICK HERE TO VIEW

Thanks to Ellie Fields and Ross Perez at Tableau Software for help with the display!

Usage Notes

click on chart for sharper image

I can refresh the data every quarter. First quarter 2010 will be out in a month or so. The above data is from the fourth quarter of 2009.

For an interactive map of the worst banks in the country, please click on the first link.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Want to know the REAL reason that government statistics appear to be pointing to ‘economic recovery’?

$10 Billion a Month Freed up Each Month from People not paying their Mortgage. $1.9 Billion of That is in California so People can continue Leasing their SUV Mercedes and Getting Tans. Thanks Bailouts!

Posted by mybudget360

Living in California, the central hub of housing bubble mania, I have come to realize that many people that overpaid for homes are now quickly shifting their mindset to one of non-payment revolt.  With the 24 hours news cycle and instant viral financial information, many are now realizing that strategically defaulting isn’t such a bad option anymore.  In fact, this is now a significant strategy for many.  The corrupt bankers and Wall Street have set the example so people figure why shouldn’t they follow the same path?  But the problem with that is someone still ends up paying.  And that is the prudent middle class.  Look at it this way.  We have 51 million homes with a mortgage.  Over 44 million Americans are paying their mortgage diligently.  Yet our economy is screwed because we are bailing out the bankers and Wall Street but also giving incentives to many others to walk away from their home or game the current bailout structure.

Let us look at the current U.S. mortgage market first:

Source:  Census, MBA

The latest data tells us that over 14 percent of all U.S. mortgages are either 30+ days late or in some stage of foreclosure.  In other words, 7.2 million people are not paying their mortgages.  Yet banks are turning out record profits even though they are bleeding in their real estate cash-flow.  Now let us run a hypothetical here.  The median mortgage payment of those 51 million mortgages is $1,514.  This is actual stimulus for people if you don’t pay that each month.  If you aren’t paying your mortgage you just relieved yourself of your biggest monthly commitment.  So let us run a rough number:

$1,514 x 7.2 million         =             $ 10,931,916,697

So this frees up some $10 billion each month (this is a rough number).  This seems close to what Mark Zandi has calculated:

“(Zero Hedge) No, not crazy. With some 6 million homeowners not making mortgage payments (some loans are in trial mod programs and paying something but still in delinquency or default status), this is probably freeing up roughly $8 billion in cash each month. Assuming this cash is spent (not too bad an assumption), it amounts to nearly one percent of consumer spending. The saving rate is also much lower as a result. The impact on spending growth is less significant as that is a function of the change in the number of homeowners not making payments.

I’m not sure I would say this is juicing up spending, but resulting in more spending than would be the case otherwise.”

Part of the jump in recent spending has come from people flat out not paying on their mortgage.  I can tell you of a case of someone that bought a home here in California.  They paid $700,000 for a home that is now worth $500,000 (if they are lucky).  That is typical.  What is also typical is that they took on an exotic mortgage for the full $700,000 amount.  Last year, they realized that they wouldn’t be able to sell the home and wouldn’t be able to make their new modified home payment.  So once it modified late last year, they stopped paying.  Yet they had the money to pay.  They explained that the bank wouldn’t deal with them until they missed a few payments.  Now, the bank is throwing itself like an obsessed lover to help them “modify” their loan.  The terms now seem nice but they want to negotiate for more.  You have the banking criminals using taxpayer money to negotiate with people that drive around in a leased Mercedes SUV and BMW.  Does this sound like the poor grandma being kicked out of her humble home?  Apparently I’m not the only one hearing and seeing this:

“(WSJ) Some borrowers are being helped by the Obama administration’s foreclosure-prevention program and other modification efforts. Irma Bravo, the owner of a cleaning service in San Diego, recently received a loan workout that lowers the monthly payment on her $522,000 mortgage to $1,736 from nearly $5,000.

“It’s a big, big relief,” Ms. Bravo says.”

Did you get that?  A $5,000 mortgage payment was pushed down to $1,736.  Now wouldn’t you, one of the 44 million prudent Americans want to have this kind of sweetheart deal?  If you want this deal you have to imitate your local crony banker and give them the middle finger and stop paying.  Suddenly, they’ll do handstands and back flips to lower your payment.  The Wall Street system has perverted the foundation of our economy.  Do I begrudge the people doing this?  Not really.  But what I do resent is the fact that banks are using the trillions of dollars in taxpayer money to make these deals work.  If they wanted to use their own money, so be it.  But that is not the case.  And we have many people that fall in this category:

Source:  Calculated Risk

I also wanted to get this data specifically for California:

So today you have roughly 798,000 California mortgage holders not paying their mortgage for a variety of reasons.  Clearly the main reason is the economy is horrible.  But a large number are taking advantage of the situation.  The median home payment in the state is $2,384.  Let us do the math:

$2,384 x 798,832               =             $1,904,414,716

So of the $10 billion in non-payer stimulus, California receives roughly 20 percent of the cut.  And what are people doing with this money?

“(CNBC) The person had an $1,880.00 monthly mortgage payment on which they’d defaulted, but said person’s monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc.”

Well I’m glad some people have their priorities straight.  The fact of the matter is the bulk of Americans, the middle class, are being screwed by the banks, Wall Street, and also the current bailout structure.  The median home price in the U.S. hovers around $170,000.  Why not cap any bailout help to mortgages at that level or less?  Do you feel good that the folks I talked about (who make over $100,000 a year by the way) in California who have a Mercedes and BMW and continue to live in a nice home rent free are able to do so because of your taxpayer money?  This is exactly what is happening.  No wonder why many Americans must feel like fools.

The name of the game is simple.  Get into massive debt, so much so that when you fail, you will then be able to negotiate lower terms because the government enjoys rewarding horrible behavior.  Things like this won’t last long because eventually, the public that is being ramrod into bailouts wakes up and revolts.  Yet this could be a few years or much longer before any of it happens.  Things have gotten so absurd that people are now calling up credit card companies and blackmailing corrupt banks saying they won’t pay on $50,000 on debt unless something changes.  In many cases, credit card companies are changing terms if you sound convincing enough.  Otherwise, if you are one of the majority who honor their debt be prepared to pay higher fees for the smaller group that are milking the system.  This is an absolute war on the middle class.  And why save when banks offer close to zero percent because of the Federal Reserve cartel?

$10 billion a month freed up from not paying mortgages.  No wonder why retail spending has jumped up recently.