Financial Armageddon

'The Most Perturbing Aspect of the Current Slowdown Is That the Weakness Is So Widespread'

It's not just crusty old skeptics like me who wonder about the growing disconnect between Wall Street and Main Street:

"Summertime Blues" (The Economist)

The slowdown is spreading around the world

NOT for the first time, the recent behaviour of financial markets has been at odds with economic fundamentals. The living has been easy on American and European stock exchanges this summer, despite plenty of gloomy data. Investors may have been placing too much faith in the capacity of central banks to counteract economic weakness.

The global economy expanded by just 2.8% in the year to the second quarter, according to The Economist’s measure of world GDP (see chart). That is the slowest rate since the end of 2009, when recovery from savage recession in the wake of the financial crisis was getting under way. The most perturbing aspect of the current slowdown is that the weakness is so widespread, affecting emerging economies as well as rich countries.

...

In contrast, rich-country stockmarkets have been buoyant over the summer. During the past month American equity prices rose by 4%; European stockmarkets were even more sunkissed, gaining an impressive 6%. The rallies are now petering out, perhaps because investors are becoming more realistic about what central banks can truly deliver.

I have a funny feeling there will be lots more of the latter in the weeks to come.

Still Shaky

While it is always possible that the housing market has seen its lows, there's still plenty of evidence that suggests otherwise; among other things:

Potential supply is significantly larger than what is currently for sale

"What Housing Recovery? Distressed Sales Still High, Shadow Inventory Massive" (Forbes)

Housing markets seemed to have turned a corner, with Tuesday’s Case-Shiller data adding to the optimism.  Home prices have risen for a second consecutive month for the first time since the summer of 2010, but much of this is a consequence of the falling percentage of distressed sales, while prices are still more than 31% of their peaks and may take years to recover.  With 11.4 million, or 23.7%, of all residential properties with a mortgage under water, and a shadow inventory worth $246 billion, according to CoreLogic, a true housing recovery is far away.

The market is being bolstered by temporary factors

"Michael Olenick: Still Looking for a Housing Bottom" (Naked Capitalism)

Every day a growing crescendo of housing cheerleaders posit the end of the foreclosure crisis. We’re flipping our way out of the mess that we flipped ourselves into, is their usual line of reasoning. I’ve looked at national data, local data, and even data on my own block here in Florida. I tried to make the evidence prove the market has found a genuine, sustainable bottom. There are clearly gimmicks giving a temporary boost, a great PR campaign that may or may not be coordinated, and some foreclosure flippers that may do well, until they don’t. But the evidence is overwhelming: home prices are anything but stable.

For background, a chorus of the same people that created the housing crisis have been predicting a housing bottom every year or so. They’ve always been right for anywhere from a few days to a few months, then the cycle of foreclosures and lowered home values restarts and causes prices to spiral downwards. This time though, especially in certain micro-markets, there does seem to be measured home price appreciation.

Two trends are apparent. One is that banks are delaying foreclosures, or not foreclosing at all despite long-term delinquencies. The other is that private equity firms – flush with cash thanks to Tim Geithner’s religious devotion to trickle-down economics and the resulting cascade of corporate welfare – have been bidding up and holding foreclosed houses off the market. These two factors have artificially limited supply and, combined with cheap mortgages rates, driven up prices. While we can debate whether these strategies represent the best public policy, these policies are obviously not long-term sustainable.

The raw data is less favorable than the headline statistics suggest

"Spot The Housing Bottom: New Homes For Sale Drop To Lowest Ever; Average New Home Price Plunges To 2012 Lows" (Zero Hedge)

Looking at the headline number in the just released New Home Sales data one would be left with the impression that the tepid "recovery" in housing may be chugging along: after all with a seasonally adjusted annualized 372,000 new homes sold in July, this was an improvement to the revised 359K in June (ignoring that the US housing market at best continues to drag along the bottom). This impression, however, promptly changes when one looks at the underlying data. The reality: the actual number of new homes sold in July was 34,000, the same as in June, and the lowest since March. Of this, a massive 3,000 (yes, three thousand) homes were sold in the Northeast in the entire month. Where things get worse is when one looks at the number of new homes for sale. At 142,000 (of which just 38,000 actually completed), this was the lowest number. EVER.

Two key drivers are less-than-supportive

"Is This the End of the Housing Bust? Not So Fast, Says Shiller" (Total Return)

Many indicators are pointing to a bottom forming in the housing market. New-home inventories are at historic lows. Home-builder sentiment has finally turned the corner. And finally, home prices have ticked up for four months in a row on a seasonally-adjusted basis.

All that might make it tempting to call the “all clear” once and for all. But one of the earliest experts to identify the real-estate bubble, Yale University professor Robert Shiller, isn’t convinced we’ve crossed into safe territory just yet.

His reasoning? The home-price rebound, if that’s what it is, doesn’t yet have momentum – which Shiller’s research has found is the most powerful driver of home prices.

Momentum is the tendency for prices to keep moving in the same direction. It exists, but is a relatively weak force, in the stock market. In the housing market, though, it’s proven to be a reliable predictor of where prices will go in the future.

That’s in part because of what Shiller calls “feedback loops.” When someone makes a lot of money off of home-price increases, his friends hear about it and maybe the media takes note. Others who hear those stories decide to take their chances buying a home themselves. That leads to further price increases and more success stories, and the loop continues.

Feedback loops can help home prices – as they did during the housing boom – or hurt them, as they have with all the bad real-estate news over the last few years.

With several successive months of price increases, you’d think that momentum would finally be in the real-estate market’s favor. But Shiller says he stills sees reason to be skeptical.

“It could be [a bottom]. It’s a real possibility. I just don’t know,” he says.

Among the reasons to be wary, according to Shiller: a large overhang of homes that are either in foreclosure or near it. If those homes flooded the market, it could push prices down even further.

And though momentum is the No. 1 driver of home prices, the No. 2 driver, the unemployment rate, is still well over 8%.

Unusual seasonal influences paint an overly positive picture of current conditions

"Home Prices Rise Slightly, But Not in the Philadelphia Area" (Philly.com)

Michael Feder, CEO of RadarLogic, a New York firm that provides data analysis for real estate, said that although the data exhibited more strength to date in 2012 than they have over the same period in the preceding three years, "this does not necessarily indicate that home prices have hit a bottom."

Feder and other experts said the mild winter weather temporarily boosted demand.

"Assuming that these buyers would have entered the market later in the buying season under more typical circumstances, the early uptick in housing demand will have come at the expense of weakness in demand later on," Feder said.

Home prices are not likely to appreciate on a sustained and meaningful basis, Feder said.

"Rather, short-term appreciation will paradoxically short-circuit long-term appreciation and perhaps trigger further declines," he said.

Activity is being distorted by credit-related factors

"Jonathan Miller: Don't Buy The Hype About A Housing Recovery" (Business Insider)

Much of the housing recovery you've been hearing about is still just hype, says Jonathan Miller of Manhattan-based real estate appraisal company Miller-Samuel.

"We keep throwing the 'recovery' word around, but the big numbers are coming from sources being created from the tight market," he told Business Insider. "Tight credit is causing rents to rise; falling mortgage rates are pushing people to buy.

"There's this sense that no one really has a sense of where we are in the housing market. Recovery is this very generic, undefined term. Maybe that's a good thing, not one extreme or the other."

Ultimately, it depends where you are.

"When you say 'recovery' you're implying that things are going to go up," Samuel continued. "In certain markets you might see that, but in some you won't."

So what does the seasoned appraiser think consumers will see in the market over the next five years?

"A sideways orientation," he said. "For now, it may make lenders more comfortable and help turn prices around, but I guess I take offense to it because I think when people hear it, deep down they don't trust the message either. All it does is create more confusion."

Beep-Beep

A picture speaks a thousand words (or maybe only two)...?

(Images: http://www.businessinsider.com/corporate-profits-finally-top-out-2012-8, http://moneymattersblog.com/lpl-financial-research/weekly-market-commentary-may-9-2011/, http://www.businessinsider.com/henry-blodget-hows-our-bear-market-doing-2009-6, and http://evstudio.info/a-bicycle-city-requires-bicycle-infrastructure/)

More Good News

Since bad news is good news when you're a stock trader, those guys should be feeling ecstatic about what New York Stock Exchange CEO Duncan Niederauer had to say in an interview with Fox Business News regarding NYSE Euronext's 8th Annual CEO Survey:

Mr. Niederauer: "What was most...disturbing from the results this year was this was the first year we surveyed small businesses and they overwhelmingly said, 'don’t look for a lot of job growth from us next year, we’re nervous'" --

FBN: "In fact, two-thirds of them say we're either gonna cut jobs or have no job improvement at all."

The Flatline Economy

If you take inflation (however understated the official statistics might be) and population growth into account (i.e., the red lines on the following graphs), the U.S. economy has essentially been flatlining for a decade (and probably longer).

Then again, maybe I'm just using the wrong data. Or not.

It's Time...

...for another round -- the first two were here and here -- of "you know you're in strange economic times when"...

An improving economy means people are worse off

"American Household Income Dropped Nearly 5 Percent in Economic Recovery" (The Raw Story)

Research released Thursday by a firm created by two former Census Bureau officials revealed that U.S. median household income fell almost 5 percent from June 2009, when the last economic recession was said to have ended, through June 2012.

Americans age 55-64 took it on the chin during the post-recession period starting in June 2009, seeing household incomes plunge nearly 10 percent, according to data produced by Sentier Research. Younger Americans ages 25-34 also saw their incomes drop by nearly 9 percent.

The supply of butlers is booming

"The Downsizing of the American Butler" (CNBC)

Five years ago, butler Paul Pearson could browse the job listings for butlers and have plenty of choices.

“You could really pick the job you wanted and often negotiate the terms,” said Pearson, a veteran British butler who worked for the Queen of England and Brooke Astor. “Now it’s totally different. For every position there are 10 or 20 people applying. And forget about negotiating anything. People take what they can get.”

Pearson likes his current job as household manager (the new term for butler) in a mansion in the Northeast. But he keeps close tabs on the butler economy – and what he sees would make Jeeves weep in his silver tray.

Butler's salaries are down between five to 20 percent in many markets in the United States compared to five years ago, according to placement agencies. Applicants far outnumber jobs. And while high-quality, experienced help can still find work, overall demand for butlers remains well below its peak during the butler boom of 2005 to 2007.

People are paying banks to take their money

"World Watches as Danes Venture Below Zero" (CNBC)

Of all the many striking policy measures taken since the financial crisis, one of the most extraordinary has gone almost unremarked—the introduction of negative official interest rates by Denmark.

In an attempt to maintain its strict currency peg to the euro, the Danish central bank lowered its main deposit rate for banks—the certificate of deposit or CD rate—to -0.2 percent last month.

The Nationalbanken felt it had little choice. Investors flocked to Denmark in search of a haven outside the euro zone—one that has no currency risk with the euro [EUR=X  1.2515    -0.0047  (-0.37%)   ] and offers cheap protection against a break-up of the single currency.

The move to negative rates is being watched closely by central banks around the world. “We have never been so popular,” laughs one Danish policy maker.

Investors are seeking insights from boxers

"Financiers Call on Mike Tyson for Advice" (CNBC)

Former boxing champion Mike Tyson will meet financiers in Hong Kong next month and while he might be able to offer advice on doing time, the bankers should probably be wary of any investment tips he might have.

The boxer with the furious fists who has, in his own words, behaved like a "Neanderthal" for much of his life, will appear at an annual forum of clients of the brokerage CLSA on September 12.

The convicted rapist who spent three years in prison and was later declared bankrupt has found religion and mellowed. He recently appeared in a one-man show about his checkered life from his early days as a child thief.

"Tyson will discuss his life before and after boxing, his time in juvenile detention and prison, his faith, his sobriety, his family and his acting career, including his recent one-man show on Broadway," CLSA said in a statement.

Circus performers are going back to school

"Camp Aims to Lift Clown Frowns During Slow Economy" (Associated Press)

ONTARIO, Calif. - Even when she's not in character, Julie Varholdt acts like a buffoon.

On a recent day, the veteran clown named "Lovely Buttons" gave her age as 1 billion, 527 million and 437,512 seconds; did a few pull-ups on a luggage cart, and then stretched out on a hotel front desk to the giggles of the receptionist.

Bring up professional clowning, however, and the mother of three decked out in cartoon-sized purple buttons, a red straw hat and oversized shoes grows serious - and even sheds a few real tears.

"Clowning is an art, it is an ancient art," said Varholdt, whose grandfather was a clown. "You can't just pull on a wig and slap a watermelon smile on and - 'Poof!' - you're a clown. Unfortunately, we see it a lot."

These days, that half-rate competition is cutting into clowning when the recession has already hit some in the business like a pie in the face. A weeklong conference to help clowns punch up their punch lines and learn new tricks also became a forum for how to make it in a niche industry that is contracting in decidedly unfunny ways.

For many at the conference about 40 miles east of Los Angeles, the number of paid gigs have dropped while demand for pro bono performances at charities, hospitals and schools has soared. Parents no longer are content with someone just joking around: They want a skilled face painter, a magician, a stand-up comic and a wizard with a menagerie of ever-more-complex balloon animals.

Criminals need better training

"Teens Who Cut Hole In Mall’s Roof To Steal Air Jordans Might’ve Watched Too Many Spy Movies" (The Consumerist)

Sneaking around wearing dark clothing and dropping down into a room like some kind of Mission Impossible stunt might sound pretty cool, but guess what? It's still illegal to cut a hole in the roof of a mall in an attempt to steal pricy sneakers. Cops in Houston say two teenagers were arrested for doing just that in a failed attempt to swipe Air Jordan sneakers.

The mall was closed early yesterday morning after a security guard spotted people inside a shoe store and called the cops. When the police arrived, they noticed someone had let themselves in via a hole in the roof. Of course we don't know if they copied Tom Cruise's spy moves or not, but how else do you get down from the roof to the floor but with a rope harness?

Up on the roof, investigators discovered more than a dozen pairs of the sneakers, which sell for $140 or more a pop, as well as the two teens. A third suspect fled and escaped arrest.

The kids have been charged with burglary and evading arrest.

Satirical stories seem more credible than mainstream reporting

"Fed Chief Makes Diplomatic Visit To Econopolis" (The Onion)

ECONOPOLIS—As part of an effort to consolidate ties with the sovereign fiscal nation, U.S. Federal Reserve chairman Ben Bernanke visited the cloud city-state of Econopolis on Friday to participate in ongoing diplomatic talks.

Bernanke, who traveled in a luxury cable car to the opulent capital floating 20,000 feet above the earth's surface, was greeted upon arrival by President Cash Moneyton III, as well as a delegation of Econopolis representatives from the Ministry of Supply, the Bureau of Demand, the Agency of Goods, the Department of Services, and the Office of Consumption.

"Econopolis is the world leader in the exchange of currency and a shining beacon of commerce," said Bernanke, admiring the hundreds of glass skyscrapers and the 125-story golden dollar-sign-shaped tower that dominate the skyline of the Ka-Ching financial district. "This great monetary nation is a key strategic partner for the United States and crucial to its fiscal well-being."

Maybe It's a Language Problem?

But, but, but...I thought things were supposed to get better during a "recovery"?

"Household Income Fell More in Recovery Than During Recession" (Washington Post)

Annual median household income is struggling to recover after the most recent recession. Although it has gone up from its low in August 2011, it is still 7.2 percent below the December 2007 level.

 

The 'One Strike and You're Out' Economy

"Forget the dreams -- how do we make it 'til tomorrow. Tomorrow's the dream."

While bad news is fantastic news for the easy money addicts on Wall Street, it's a whole other story for the millions of desperate Americans who share the fate of the eight families profiled in the forthcoming documentary, American Winter.

Back in the Economic Danger Zone

In its State Coincident Indexes report, the Federal Reserve Bank of Philadelphia publishes gauges, calculated from four state-level indicators, that summarize current economic conditions in each of the 50 states.

The Philly Fed also produce one- and three-month diffusion indexes derived from aggregate changes in the state-level indexes that offer a read on what is happening in the U.S. economy as a whole.

If the history of the past three decades or so is any guide, the latest data indicates, contrary to what the experts keep telling us, that we are in or entering an economic downturn.

It's That Time of Year, Again

Things are looking up this holiday season:

"As School Bells Ring, Retailers Start Listening for Sleigh Bells" (Reuters)

U.S. retailers expect another solid showing this holiday season, as summertime surveys and shipments show that companies are placing big orders even as some remain cautious about the economy.

A report from the National Retail Federation showed that increases are expected in imports during August, September and October, critical months when chains get their merchandise from overseas in time to stock their holiday shelves.

Meanwhile, manufacturers and importers surveyed by Capital Business Credit showed "cautious optimism" for the 2012 holiday season, said Andrew Tananbaum, executive chairman of CBC, a non-bank lender for the retail sector.

Such upbeat takes suggest that retailers expect the upcoming winter holiday season could help them overcome what has been a somewhat muted back-to-school season. Retailers such as Walmart and Gap Inc have seen strong sales of apparel, but others including Aeropostale Inc have seen a soft start.

Or maybe not:

"Walmart Brings Layaway Back Early, Tweaks Fees" (Reuters)

Walmart is bringing back layaway a month early, giving U.S. shoppers under economic pressure more time to pay for holiday gifts, and will refund related fees with gift cards once payments are completed.

Layaway, which allows a customer to keep a product on hold at the store and pay for it over time, helped boost holiday sales for Walmart when it brought the service back in 2011 after a five-year hiatus.

Offering layaway helps retailers such as Wal-Mart Stores Inc win over shoppers without access to credit [e.g., quick online loans]. Walmart U.S., Wal-Mart's largest unit, also offers check cashing and other services as it tries to appeal to shoppers without bank accounts.

Walmart's holiday layaway service will begin on September 16, it said on Monday. Last year it began on October 17.

"The customer was saying if they had two more pay cycles that really would be helpful for them," said Walmart U.S. Chief Merchandising and Marketing Officer Duncan Mac Naughton.

The longer layaway plan comes after Wal-Mart said it saw more incidents of consumers living paycheck-to-paycheck during the latest quarter.

The Big Bet That Nothing Will Happen in the Weeks Ahead

Many commentators have noted that the so-called "fear gauge," or CBOE Volatility Index (VIX), a measure of market expectations about near-term volatility, has been trading at multi-year lows, suggesting that traders are complacent about the risks ahead.

In fact, a low VIX has often been the precursor to market corrections and sell-offs over the past several decades.

But a more granular reading of the term structure of implied volatility, which shows how expectations vary at different points in time, offers, perhaps, a more interesting perspective.

As the following chart shows, expectations about implied volatility -- essentially, the relative price of options -- on two widely-followed (and heavily-traded) ETFs have over the past month fallen much more on a relative basis for short-term options than for their longer-term brethren, suggesting that investors have been making an aggressive bet that nothing untoward will happen in the immediate period ahead.

Arguably, this low level of concern reflects the fact that traders believe: 1) the Fed will launch another round of easing (most likely announced around the time of Kansas City Fed's Jackson Hole symposium at the end of the month); 2) the ECB and other authorities will do whatever it takes to prevent any sort of calamity from unfolding in Europe ahead of critical meetings and other developments set to take place starting in September; 3)  growing turmoil in the Middle East won't reach a boiling point until well into the fall; 4) or, nothing of any consequence will happen in the remaining dog days of August because so many people are on vacation or otherwise sitting on their hands.

For their sake, let's hope they are right.

'Most Have Been Unemployed for Months or Years'

Yup, sure sounds like a "recovery" to me:

"Long-Term Jobless Regroup to Fight the Odds" (New York Times)

The analysts pore over the numbers every month, the full menagerie of economic indicators. President Obama and Mitt Romney trade barbs over who is at fault for a sluggish recovery. But here, in a region with one of the highest unemployment rates in the country, other numbers often loom larger.

There are the roughly 1,600 résumés that Byron Reeves has sent out since he lost his job in accounting nearly four years ago, and the paltry 10 or so interviews they have produced. There is the $300 check that Yundra Thomas could not write to send his daughter to band camp, because he has been out of work for six months.

Each week, Mr. Reeves and Mr. Thomas gather with 40 or so other unemployed workers in a small, barren and fluorescent-lit room here, in a kind of self-help program that is part of California’s official effort to help residents find jobs. Most have been unemployed for months or years. Time spent with them at several gatherings over many months reveals a postrecession landscape where grim frustration battles with the simple desire to find a way out.

They were once advertising executives, engineers, social workers, teachers and purchasing managers. Now they come week after week, dressed for the office, carrying binders full of résumés and leads for potential jobs. They refine what they call their “60-second commercial” — a way to pitch themselves to nearly anyone they meet. When the three-hour meetings end, they mosey over, some reluctantly, to a table packed with day-old bread donated by a supermarket.

Maybe they should forget about finding a "real" job and start day trading Apple's stock, instead. That's an easy way to make money, right?

Charts for Thought

Consumer recovery?

(Source: Business Insider)

 

Low risk investment?

(Source: Liberty Street Economics )

 

Optimistic outlook?

(Source: The Economist)

 

Improving job market?

(Source: Zero Hedge)

Stocks are 'cheap'?

(Source: Zero Hedge)

Another Planet

Question: How can anybody read the following reports and honestly conclude that a consumer recovery is on the horizon?

"U.S. Economic Confidence Remains Lower" (Gallup)

The majority of Americans continue to say the economy is getting worse

Gallup's Economic Confidence Index was -27 for the week ending Aug. 12, similar to the -26 the week prior and little changed from the previous eight weeks, during which it has hovered within a narrow range of -29 to -23.

"Poll: Optimism On The Economy Drops" (TheDenverChannel.com)

Growing Number Believe Conditions Getting Worse

A new national survey indicates that the number of Americans who say things are going badly in the country is on the rise, as a growing number of people believe that economic conditions are getting worse.

The number of Americans who said that things were going well had been slowly but steadily rising since last fall, but numbers from a CNN/ORC International poll released Friday reverse that trend, with optimism about how things are going in the country now at 36 percent down seven points from April. And 63 percent say things are going poorly, up six points from April.

"More Than 50% of Poll Respondents Expect Economy to Get Worse" (Real Time Economics)

Consumer spending in the U.S. continued to decline during July as consumer sentiment about the economy waned and expectations about personal finances were unchanged, according to Discover Financial Services’ U.S. Spending Monitor.

The poll index, which tracks economic confidence and spending intentions of about 8,200 consumers a month, declined 1.4 points to 89.3 points last month.

The poll found 28% of respondents view the U.S. economy as improving, down from 29% in June and 33% in May. Roughly 53% of respondents now rate the U.S. economy as poor, unchanged from June.

However the portion of consumers that expect the economy will get worse rose to more than half for the first time this year–up 4 percentage points at 53%–as sentiment among men worsened. The portion of men who indicated expectations the economy will worsen was up 9 percentage points at 57%, while the amount of women who felt that way was unchanged at 50%.

"Middle-Class Economic Security Declines as Wealth Concentration Increases" (Center for American Progress)

America’s middle class became poorer and more economically insecure during the Great Recession, as household wealth concentrated in the hands of the rich, according to new Federal Reserve data about the recession and its aftermath. The latest Survey of Consumer Finance data covering the years 2007 to 2010 are yet another reminder that addressing the economic insecurity of the nation’s middle class must be the top priority for policymakers.

...

The percentage of families with no or negative wealth rose to 32.5 percent in 2010—up from 19.2 percent in 2007. Likewise, the share of these households without sufficient emergency funds dropped to 32.4 percent in 2010, down from 37.5 percent in 2007. On both measures, household financial insecurity was the highest in 2010—higher than any other period since 1989, the first year for which consistent data exist.

"High Anxiety: Half of Baby Boomers Doubt They Will Ever Retire" (Los Angeles Times)

Baby boomers are in a state of stress, with half unsure of their retirement prospects and the vast majority blaming political gridlock for damaging their economic security, according to interest group AARP.

Nearly half of voters ages 50 to 64 who have yet to retire say they’re dissatisfied with their financial situation, AARP found in a recent survey. A majority believe the economic downturn will shrink their retirement savings, forcing them to rely more on Social Security and Medicare.

Nearly three quarters believe they’ll have to delay retirement and continue working, while nearly as many don’t think they’ll live comfortably once they reach it.

Half don’t think retirement will ever come, compared to 43% of younger voters.

Since 2005, the median wealth of a boomer household has sunk more than 17% to $149,348, according to recent Census Bureau figures. Many no longer plan to leave their children an inheritance.

Worries about health care, inflation, taxes, nest eggs and more have boomers scoring a 70% on AARP’s anxiety index, compared to 59% of younger voters and 46% of people ages 65 or older.

Even the news that is being spun as positive is anything but encouraging. Take this story, for example:

"Workers Living Paycheck to Paycheck Drops To 40 Percent: Poll" (Newsroom America)

Fewer American workers are reliant on their next payday to make ends meet, according to a new CareerBuilder survey, with forty percent of workers reporting that they always or usually live paycheck to paycheck.

That's a slight decrease from 42 percent in 2011 and this year's figure marks a recession-era low, continuing a downward trend from a peak of 46 percent in 2008, during the early days of the financial crisis.

The nationwide survey – conducted between May 14 and June 4, 2012 among more than 3,800 full-time workers – found that a majority of those currently living paycheck to paycheck (53 percent) were not doing so until 2008.

Additionally, 37 percent of workers say they sometimes live paycheck to paycheck, while 23 percent say they never do. Twenty percent of workers were unable to make ends meet at least once in the past year.

Workers making at least six figures are feeling more confident in 2012. Twelve percent of workers who earn $100,000 or more always or usually live paycheck to paycheck – trending down from 14 percent in 2011 and 17 percent in 2010.

"Making ends meet remains a challenge for millions of households, but the situation has improved for workers who've grown more confident with their job security or who've taken steps to pay down debt [e.g., www.cashloans.co.uk] and save more," said Rosemary Haefner, vice president of human resources at CareerBuilder.

Sure, the headline number showed a marginal improvement from a year ago, but the way I read it, nearly four-fifths of American workers say they live paycheck-to-paycheck at least some of the time. That sounds more like a recipe for disaster than a reason for optimism.

Sometimes I feel like I'm on another planet.

Heading for an Unhappy Ending

The way I see it, there are only two conclusions you can draw from the above: either Americans are unduly -- even wildly -- optimistic about their car-buying plans -- and, by extension, their future prospects -- or their ability to buy a new car depends on something other than their earning power and economic circumstances.

If the latter, perhaps it has something to do with this:

"Subprime Car Loans Return to Favor Among Auto Lenders" (Detroit News)

Consumers without top-tier credit are finding it easier to get new car loans, as banks and other lenders are lowering the scores needed to qualify.

While that means additional sales for automakers, and enables more motorists to get into new cars and trucks, it raises questions as to whether lenders are falling into the same risky lending practices they followed before the recession.

"There's a lot of lenders now that are into the subprime business," said Jody Lee, sales manager at Taylor Chevrolet. "What used to be a good score at a 650 or 700, now 550 is a good score."

During the first quarter of this year, total U.S. car loans totaled $52.5 billion. That's 49 percent higher than the same period in 2009 — the recession's low point — according to Equifax's National Consumer Credit Trends Report.

Also during the first quarter, the average amount financed on new vehicles rose by $589, to $25,995, and for used cars by $411, to $17,050.

Furthermore, buyers are stretching out payments for longer terms: The average length of new- and used-vehicle loans jumped a full month during the first three months of this year, to 64 and 59 months, respectively.

More loans and looser lending restrictions have helped boost new car and truck sales to levels not seen in four years. Estimates call for 14 million to 15 million vehicles to be sold in the U.S. this year, about 30 percent higher than in 2009.

Either way, it's hard not to think that the extraordinary divergence between the two markets -- jobs and autos -- will lead to an unhappy ending.