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Consumption And Spending Both Miss Estimates As Double Dip Fears Push Savings Rate To Highest Since June 2009
While economists were looking for Personal Income to come at a 0.2% growth in June, the actual number was an unchanged print from May (and a drop from the 0.3% revised rise in May). One wonders just where the Chairman gets the temerity to say that US consumers will spend more with time, despite the just confirmed (for the nth time) contraction in actual incomes, not to mention that the second drop in Payrolls in as many months will once again confirm the double dip. Further confirming the Goblin-in-Chief's delusion was that personal expenditures also printed below expectations, coming in at 0.0%, on expectations of 0.1%, down from a revised 0.1%. In other words the savings rate in June was unchanged. Yes, that means consumer did not spend more than in May, and goes against the whole "economic expansion" propaganda. And putting the last nail in the spending coffin, was the personal savings rate, which at a revised 6.4% came at the highest reading since June 2009. The US consumer is done (there are only so many iPads a bankrupt mortgage holder can buy), and no matter how fast the Dow hits 36,000, nothing will change this.
Full BEA release.
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Wells Fargo/Gallup Small Business Index hits new lows: http://www.gallup.com/poll/141692/Wells-Fargo-Gallup-Small-Business-Inde...
You can always rely on Bloomberg to get the headers right these days:
"Consumer Spending and Incomes in U.S. Unexpectedly Stagnate"
Assholes.
Bloomberg: predictably retarded.
Yep, those editorial guidelines issued by the Fed to pretty much all of the MSM:
1) Anything bad is 'Unexpected'
2) Anything good (or less bad than expected) is 'Confirmation' of the 'Recovery'.
@SteveNYC
LOL, I'll go you one better on retarded headers.
Federal Reserve to start the deflation fight next week, experts claim
http://www.telegraph.co.uk/finance/economics/7923054/Federal-Reserve-to-start-the-deflation-fight-next-week-expert-claims.html
And here I am, somehow, believing that Quantitative Easing was all about printing money to pay the Government’s bills and stuff the hole left from the bail-outs.
Even stupider than that, I’ve been believing that deflation was brought on by increasing deficit, lowered GDP, high unemployment and elevated debt, all sewn into a service and sales based economy.
I guess last time they printed a couple of trillion it was just to make sure the printing presses were operational…but now the "real" fight begins.
This is good news. If Deflation was a high risk, they would get started this week! But since it is unexpectedly subdued, they will get to it next week. This is bullish.
I'm waiting for them to move up to "inexplicably."
I guess to the morons on Bloominidiotberg and CNBS who get paid millions and have the minds of gerbils, all bad news is unexpected! Well at least until they get canned, then all the statistics will suddenly become relevant.
And the sun unexpectedly rose in the East.
People cutting back even as gas prices fall. With oil surging (thanks to Ben playing with the EUR), I'm sure people will open their discretionary spending wallets while gas soars over $3 (national).
Just the kind of shit that a broke guy criss-crossing town looking for a new job would love to deal with.
Yes, have been watching oil and interest rates closely, and thinking similar thoughts. Don't think that QE2 is going to gun stocks the way QE1 did, as interest rates and oil are already pretty twitchy, and further increases there will likely offset many of the "positives" that the Fed and Treasury were hoping to accomplish.
ben may be the most dishonest man in america
Isn't it obvious that people are putting all those savings into the markets, as the ever-constant rising indexes would indicate?
Oh! Wait! They have been pulling BILLIONS from the markets.
Spending and 'consuming' down OK so DOW to 12,000 today then?
What was the original, unrevised May figure?
According to Yahoo Finance, the prior Personal Income was revised to 0.3% from 0.4%, Core PCE prices and Personal Spending revised to 0.1% from 0.2%.
Well, that's great news then - they expected a drop from 0.4 to 0.2%, but got 0.3 to 0.1% - in other words it didn't worsen at a faster rate than expected!
I should work for Marketwatch!
This data screams "House of Sand", but media outlets tell us the recovery is only taking a break before the eventual breakout.
Already posted this earlier, but message disappeared, so I try finding some answers here:
Futures pumping has been named as the driving force behind recent "optimistic" market behavior and some evidence of futures quote stuffing has been provided by Karl Denninger recently.
But how can this have such a strong DIRECT effect on the indices (especially when done at night)? Other than by FAKING a positive sentiment, I cannot see why indices should go up when someone is pumping up futures. I mean, unless an (automated algorithmic?) link is being created by the manipulator, there is no direct buy/sell link between futures and underlying indices/stocks/commodities, no? Who else than the manipulator and some informed speculators playing along would buy stocks just because futures keep going up for sometimes unknown reasons (in retrospect)?
I have been wondering, therefore, if the direct manipulation of indices (and stocks or other underlying assets, e.g. precious metals or oil) isn't done rather through high-frequency ETF trading (using short and long ETF trackers, probably leveraged). Because then there is a direct link between the price movements of underlying assets of the ETF and the price of the ETF, isn't there? If one shorts a reverse ETF or one massively buys a long ETF, the markets can be pushed up. Or is my reasoning wrong, in that buying/selling of an ETF does not force the issuer to buy/sell underlying stocks in proportion to the move of the index?
Anyone has insight in this?
Its makes no sense as to HOW it could keep working day after day without some smart folks out there with a large short fund breaking their back, but in a zero volume environment with no opposition apparently they CAN pump the market daily on 200 shares! Pump the futures, and set the machines on 'Habbibulin stick save' mode~
I agree sticksaving occurs non-stop, so blatant... and shorting seems to have become impossible (except right before the next engineered bear trap...)
Yet hard to believe that they can make money by recycling 200 shares, except if there are STILL enough dumb money (or reckless) traders out there willing to sacrifice the required spread over and over again, perhaps thinking they can beat a computer... I mean, how can the smart guys have a net positive result at the end of the day, if they're just trading with eachother? Therefore, I think they use the direct feedback system between short and long ETF's and the underlying assets to manipulate the underlying asset prices. As they are always "informed" ahead of the market, they can continuously reap profits from short and long trades in the ETF's as well as in underlying assets and futures, with or without the help of HTF bots... Futures manipulation is only faking a positive sentiment.
Is it true that paying down debt is now be counted as savings??? What is the reasoning for this? Just because you can't spend it.....they count it as savings???
Goobermint Formula: Income - Expenses = Savings
Minimum monthly payments fall under Expenses, while making larger and/or multiple payments does not...therefore...savings.
Only the Goobermint could rationalize this...
@curby
Yeah, when the hedgies do it it's called deleveraging, but when J6P does it, they call it savings.
Deflation writ large, and it scares the hell out of the Fed. The markets? Not so much.
In economics, the debt paid off is 'savings'. You have reduced the 'ol personal balance sheet by reducing your liabilities. Those liabilities came about because you spent more than you had available in earlier periods.
So if you don't 'consume', it's savings, even if you are paying off debt.
Of course, BO and crew will be coming to take that extra here soon. A lot sooner than you would expect.
Taxes are an expense so that'll eliminate that pesky savings rate issue.
There is huge scope for spending in the US economy , just not in personal consumption.
There must be 1 million + passengers traveling between Chicago and New York yet there is no high speed train line !
Even the rich traders don't want to spend money on utilities that would benefit their lives - they want everything for personal consumption - this is crazy stuff.
The American economy is stagnating because there is no capital spending - effeciencey in production is at its limit - any more efficiency increases should be in consumption.
Friends of mine who were at O Hare recently stated the infrastructure was extremely dated - this is in fact a opportunity, instead of spending money on legacy 20th century technology these bottlenecks can be skipped not unlike the post war European economy.
Jesus this is simple stuff - you need to start capital spending now - the lack of ambition within the US is mind blowing.
Do laser-guided bunker busters count as capital spending?
These practical things you mentioned were not "shovel ready" and therefore would not have the immediate stimulative effect to keep unemployment capped at 8%. Dont you read the talking points?
You cannot have long term consumption without wise investment.
I have no time for stimulus - what wealth does stimulus create - it just creates more unproductive debt.
Face it the currency is going to collapse no matter what happens - it is now just a question of time.The rest of the world cannot tolerate your profligate waste of energy on consumption.
When that happens your oil costs could be equal to European oil costs without even factoring in the extra tax revenue that Europeans pay via transport costs.
This is a fucking emergency and you cannot feed people with worthless IOUs.
You're preaching to the choir there, big Guy!
Capital spending is the last resort of a dead economy. Why spend anything today that will be cheaper tomorrow? Why pay expensive labor today when you can enslave people tomorrow and make them do it? Why build projects you will have no future means of repairing and maintaining?
We still have an incredible amount of infrastructure that was built by the CCC... don't worry, we'll get another chance to do a little of it. Albeit with a different benefactor.
But that's part of the gag... our infrastructure has been in decline for decades... the wealth gap has to get created somehow...
The infrastructure is heavily oil dependent - when your currency collapses the oil price in dollars will go to the moon and your roads will become fields.
Already heading that way.
http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704913304575370...
Excellent, thanks for that.
Both the truth as well as the visible future (different versions of it anyway) both thrive at the fringes and on the margins.
You know we reached the next level when you read a similar story but the heavy equipment is replaced with low cost manual labor... like the way 90% of other countries do it.
this is where we're headed. We're just waiting until the labor is cheap enough to get started... I'd hate for this place to look like Estonia with a bunch of pretty buildings (and girls) that clearly have no way of being maintained or repaired... and have seen better days... but we simply don't have a choice...
The sale of government buildings, etc. by state and local governments is no different than pulling up the road... why do you need a road when gas is going to become prohibitively expensive or no one has any reason to travel?
Eventually the building materials from demolished cities will be used to build a new infrastructure with obscenely cheap labor. Your tax dollars at work...
Unfortunately most of those building materials are crushed, bulldozed and landfilled. Really all that is generally salvaged, if at all, are foundations (because it's cheaper) and any high-value architectural elements like stained glass windows and fireplace mantels (because they're profitable and easy to remove).
Landfill mining is becoming more profitable, now that more metal exists in landfills than in the earth.
Deconstruction could add more than a million jobs, and $500,000,000 (by just one estimate) in value to the REAL economy. And it's almost invariably profitable from a municipal and even an individual business level. Yet most local political leaders are blind to the benefits, largely because holding a press conference about disassembling a house and reusing its components doesn't score as many headlines or corporate donations as does announcing a solar manufacturing facility.
All part of the literal disintegration that was the US.
hahahaaa... wow, very appropriate. thanks for this!
In a deflating economy, the dumbest investments are CRE or other fixed capital. It's not a lack of ambition at all, just investors acting rationally. Add the current climate of uncertainty with regards to Federal regulations and taxes, and we have the perfect recipe for stagnation and capital flight.
If you accept that the biggest bubble of all is the US dollar then most of your infrastructure created since the second world war is redundant.
A bit like the infrastructure in Germany after 1945 but this time the infrastructure is intact but useless.
If you do not get capital to rebuild your entire nation will collapse.
Dork, I love this: you are usually the most civilized, literate sounding poster here, cool in the face of corruption and budget meltdowns, and now when you get all outraged and start ranting it's about infrastructure spending. Awesome.
Thank you for your common sense, perspective, and values. And, best of luck in Austerityland! I hope they don't switch off the Interwebz any time soon so we can all keep comparing notes and viewpoints.
Thanks Jim but I guess it is easier to diagnose solutions when you are living in a small country and can clearly see the chains of command.
Our austerity here is useless given that our sacrifices go to paying some bankers retirement in Nice which is also just consumption that is expending capital.
I will fully embrace austerity when the banks increase their capital ratios dramatically, take a debt for equity swap and generally get down and dirty with the rest of us peasants.
Infrastructure, at least conventional infrastructure, is an emerging bubble, when you consider the ecology of it.
The better way to go would be toward Natural Capitalism (PDF) - http://salient.nohomepress.org/wp-content/uploads/2008/03/hbr-rminatcap.pdf
i know amory and hunter lovins. well they are divorced now, and she is in boulder, spreading this word. she is r e a l l y a tough ass cow girl. amory started rocky mountain institute RMI, he is pretty gone in the mind with ideas. IGOECO. plates on his shit car.
Yeah, definitely my impression as well - having only met her a few times at different "sustainbility" events. Same with Amory and RMI - RMI has declined in utility and reputation since he stepped down.
That's funny shit about his plates.
I'm not a natural capitalism acolyte, but it is a good framework with powerful elements to it. Biomimicry for sure, as well as moving from capital-intensive economies to ones that revalue human capital appropriately.
There could be millions of jobs ready to go, if only government stopped focusing on the bullshit advanced technology and manufacturing, and looked at the easy and immensely beneficial stuff.
i am planting a garden today, because i believe in tomorrow.
U S o f A, N O T.
On the plus side, there will be plenty of bargains in the sales this year..
S'all good. Our "representatives" in CONgress are currently preparing a $26 billion state bailout. Of course we all know that would kick the can for only a couple months. Maybe three. Gotta keep the union mouths fed thru the election.
One minor concern for the mkts is its a source of liquidity.. With an increase in stock prices brings the demand to cash those prices in. People with zero savings will cash in those 401k's for cash now. This also increases with more small biz's failing and of course layoffs
kind of... I'd be more worried about what the 1% was doing... than the rest of the plebs.
Question/Thought Experiment:
Could a tea party President issue an executive order de-unionizing the Federal Government? This would be a death blow to the SEIU and would open the door for state Governors to do the same.
Only 1 junk? The government monitors must be on a porn break.
Why do we need a tea party to do it? It's going to happen naturally when the unions suck us dry. Eventually, there is no free lunch and their bargaining power wanes. The sacred ox cannot be gored as it has built an unknockoutable defense. Just sit on your hands and watch... pull out a beer and a lawn chair.
We can hasten their demise, but it will all be the same in the end. A little pie and a whole bunch of people wanting a piece.
I think you're likely conflicted as to where the tea party should be going. Reducing payments to the sacred oxen stinks of austerity. The real name of the game is repudiation. The question is if we begin the austerity process now, in earnest, what will that do to our chances to repudiate? I posit that austerity is the goal of our keepers and repudiation is the only tool in our disposal. By getting our financial house in order asap, we reduce our ability to repudiate, given we will only repudiate when it is our last possible alternative (we don't believe in a proactive approach, Winston nailed us).
A massive reduction in the size of governments of all levels, at this juncture, given the wealth gap, would be incredibly stupid on our part. In this sense, the impetus is on us to reform how the system works before everything falls apart in a deflationary tidal wave. After collapse, our regional robber barons will remove the government's cock from our ass and insert their own (even though they previously had their fingers in the government's ass). I have no idea who the fairer master will be, and in many ways it is probably the robber baron, but without a leveling of the playing field prior to collapse, the head start afforded to the club will be insurmountable post collapse.
In short, goring the sacred ox will do nothing but prolong the ongoing looting. If you want reform, it needs to be directed elsewhere if you want any chance at it actually working. I am in total agreement that it is a pervasive problem... but it's on down the to do list...
Couple of points:
1) As long as the right things happen, I really don't care who does it. It so happens that the Tea Party is the only movement with the organization and grass-roots base to be able to pull off the kind of sweeping reform I want to see, which is why I cited them. If I am completely honest and objective about it, however, I have to say that the Tea Party is just as likely to be co-opted and corrupted as any other consensus-oriented, law-abiding political reform effort in this country. See Scott Brown. He infiltrated the Tea Party, rode to power on their support, and betrayed them within a month of being elected. This is the historical pattern in the US, and it is why I am not optimistic about our prospects for peaceful reform.
Best case: peaceful reform.
Second best case: breakup of the US/secession of freedom-oriented sections of the country.
Worst case: violent revolution.
Actually, scratch that. The worst case is the current status quo.
2) This is where you and I differ: I WANT "everything to fall apart in a deflationary tidal wave." A deflationary tsunami is the natural, multi-cyclical cleansing mechanism of the system. It takes an event of that magnitude to open eyes and change consciousness. It takes an event of that magnitude to purge the system of the liars, crooks, frauds, charlatans, and hucksters who inevitably rise to positions of power and privilege in a long bull cycle. Deflation is Shiva, the destroyer of worlds. Without Shiva, there is no Brahma or Vishnu.
3) Given my desire to see the deflationary tidal wave crash on the heads of Washington and Wall Street, I'm sure you understand why I want to see the federal government de-unionized. First, it eliminates a powerful and intrinsically fascistic element from its base of power. Second, it is destabilizing to the system. Third, it may set off a wave of copycat actions at all levels of the private and public sector.
In an academic vacuum, with "all things equal", I might be inclined to agree with your proposal. But, with our present circumstances, namely the wealth gap, the deflationary tsunami is exactly what your handlers want. The looting is nearly complete... we're decades late to this party. The wealth gap is so large that it has become an insurmountable barrier to entry. Any additional money is just icing on the cake.
Again, the cool thing about your proposal is that it's going to happen anyway. The emperor has no clothes and the operating expenses for the empire are too large for god to lift.
If you really want to stir shit up, and possibly change what happens post collapse, then you need to advocate a new party dedicated to the reformation of some semblance of equality and justice. That's not to say that we have to be communal... but it is to say that the wealth discrepantcy has become so large and obvious that, barring the political will to bridge the gap, we have developed a caste system. It will become painfully obvious post collapse as it is us who, through the cheapest of manual labor, begs our handlers to let us rebuild some of the country's ailing infrastructure through materials scavenged from destroyed cities. We will need strong backs and be able to withstand the whip.
Your theory of collapse being the end all to our problems is nothing short of a pipe dream. The problem is vastly more pervasive than that and will take vastly more effort to correct. I hope you have a strong back and can withstand the crack of the whip.
The worst part about it, we'll correct it, and then in a few generations, our descendants are going to fuck it up again...
The interchange between the productive and the leeches will always lead to imbalances, sometimes insurmountable through the usual channels. Ultimately, a perfect system where everyone has an equal chance to be productive, should they desire, and are uniformly rewarded for productivity has yet to be created and successfully implemented. It's pretty difficult to put a real price on the value of "productivity". We're just at different points on the timeline of the ever morphing interchange: unbridled productivity>injustice>collective bargaining>overarching regulation>bucking bronco>capture of the political class>morphine pump>collapse>wash of regulation>unbridled productivity. ssdd.
Today's Highlights:
-Personal income deflating further
-Record rise in wheat prices, oil over $80.
You tell me if there isn't inflation in yer deflation.
The U.S. economy isn't the only customer for wheat in this world. Commodity prices by themselves are not a good indicator of inflation/deflation. Unless you can point to inflation in something equivalent, I'd say the ongoing collapse of credit and M3 is a pretty strong indicator of deflation.
hehe. Let me know if you feel the same way when oil is over $100
You are confused. It doesn't matter if oil goes to $1000/bbl, if I don't have a job or access to credit, the price somebody else pays for it is irrelevant. A few years ago a kilo of rice in N. Korea fetched a handsome price on the black market, even as people were stripping bark from trees to stay alive.
You must be an economist. 99.9% of the people don't care about M3. They do care about the price at the pump and the grocery store.
As the money supply continues to collapse, my guess is that the price at the pump is only a temporary illusion... presuming that the supply chain still exists in any semblance of its former self. When you can no longer pass price increases onto the consumer, you just close shop...
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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