Don’t watch CNBC.

Don’t listen to the talking heads or analysts who are all touting some ‘investment’ product. Forget the charts. Watch the fundamentals.

This has been the easiest of all economic ‘downturns’ to predict. People have no money. They had ‘wealthiness’, they could roll over debt and borrow against bubble- inflated equity in their houses. Nevertheless, their incomes were falling farther and farther behind.

People have stopped shopping because they have no money; this is treated as  some kind of surprise:

U.S. Retail Sales Unexpectedly Fall for Second Month

May 13 (Bloomberg) — Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating that rising unemployment is prompting consumers to boost their savings. 

The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent. 

Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for years, analysts said. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued. 

“The second quarter is going to be tough,” Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston, said in a Bloomberg Television interview. “Consumers are losing their jobs, concerned about losing their jobs and losing wealth.”

Even more ominously, import prices are increasing, putting goods even farther out of reach of stingy consumers:

A separate report today showed that prices of goods imported to the U.S. rose in April for the second straight month. The Labor Department said its measure advanced 1.6 percent, more than three times as much as forecast. Excluding oil, prices were down 0.4 percent. 

Economists had forecast retail sales would be unchanged, according to the median of 67 projections in a Bloomberg News survey, after a previously reported 1.2 percent drop in March. Estimates ranged from a 0.8 percent decline to an increase of 1.1 percent. 

Excluding autos, sales were projected to rise 0.2 percent after a 1 percent decrease a month earlier, according to a Bloomberg survey. 

The decline in sales was led by falling demand at electronics, furniture, clothing and grocery stores.

The only longer term solution is one that puts money in the pockets of working people. It’s that simple. What is harder is to effect the necessary changes. Reducing the size of the financial sector which tariffs a percentage of output with no compensating gain is a good place to start. This would be easy, the Treasury is the ‘owner’ of much of Wall Street already.

Another is to develop an energy policy, one that reduces fuel use dramatically.