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Personal Income Comes At 0.2%, Below Expectations; Spending Greater Then Expected; Savings Rate Declines

Tyler Durden's picture




 

July US Personal Income comes in at 0.2%, on expectations of 0.3%, and a previous print of 0.0%. Yet making less money does not prevent consumer from purchasing (i.e., not paying their mortgages), coming in at 0.4%, higher than  expectations of 0.3% (previous 0.0% as well). And it appears consumers may have jumped the shark on the economic "improvement" just as we double dip, with the savings rate declining to 5.9%, compared from a revised 6.2% in the prior month (6.4% initially). Other news: US PCE Core M/M at 0.1%, inline with expectations, the same as the PCE Deflator, which came at 1.5%.

Personal Savings Rate chart:

From the release:

Personal income increased $30.0 billion, or 0.2 percent, and disposable personal income (DPI) increased $17.6 billion, or 0.2 percent, in July, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $44.1 billion, or 0.4 percent.  In June, personal income decreased $2.7 billion, or less than 0.1 percent, DPI decreased $0.2 billion, or less than 0.1 percent, and PCE decreased $4.0 billion, or less than 0.1 percent, based on revised estimates.Real disposable income decreased 0.1 percent in July, in contrast to an increase of 0.1 percent in June.  Real PCE increased 0.2 percent, compared with an increase of 0.1 percent.

Personal saving -- DPI less personal outlays -- was $673.4 billion in July, compared with $699.7 billion in June.  Personal saving as a percentage of disposable personal income was 5.9 percent in July, compared with 6.2 percent in June. 

 

 

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Mon, 08/30/2010 - 09:50 | 552722 centerline
centerline's picture

my string broke.  can I have another?

Mon, 08/30/2010 - 11:34 | 552902 Hephasteus
Hephasteus's picture

Sure. Here's a formula to get a new string.

http://www.youtube.com/watch?v=amUowhHVBM4

Mon, 08/30/2010 - 08:48 | 552619 docj
docj's picture

Recovery Summer rolls on.

Mon, 08/30/2010 - 08:55 | 552630 Gully Foyle
Gully Foyle's picture

docj

https://secure.wikimedia.org/wikipedia/en/wiki/Summer_of_Love

The Summer of Love was a social phenomenon that occurred during the summer of 1967. It opened with the release of The Beatles' album Sgt. Pepper's Lonely Hearts Club Band on June 1st, 1967 and closed with Woodstock in the summer of 1969, when as many as 100,000 people converged on the Haight-Ashbury neighborhood of San Francisco, creating a cultural and political rebellion. While hippies also gathered in New York, Los Angeles, Philadelphia, Seattle, Portland, Washington, D.C., Chicago, Montreal, Toronto, Vancouver, and across Europe, San Francisco was the center of the hippie revolution,[1] a melting pot of music, psychoactive drugs, sexual freedom, creative expression, and politics. The Summer of Love became a defining moment of the 1960s, as the hippie counterculture movement came into public awareness.[2] This unprecedented gathering of young people is often considered to have been a social experiment, because of alternative lifestyles that became common, both during the summer itself and during subsequent years. These lifestyles included communal living; the free and communal sharing of resources, often among strangers; and free love.[3]

Ironically, the summer of 1967 also witnessed some of the worst violence in US cities in the country's history, due to race riots that occurred in places such as Detroit and Newark. This aspect of the summer of 1967 is often called "The Long, Hot Summer". Most people attribute this violence to the frustration and anger of black Americans.[4][5][6] (See: 1967 Detroit riot and 1967 Newark riots.)

Mon, 08/30/2010 - 08:57 | 552636 docj
docj's picture

Ah.  So what you're saying is that when Barry and Sheriff Joe announced "The Summer of Recovery" I should have expected the suck-fest we've endured?

Must not have taken the Blue Pill that day.

Cheers -

Mon, 08/30/2010 - 08:51 | 552625 firstdivision
firstdivision's picture

Going to rally at least 10 pts as the day moves on barring any sudden bad news.

Mon, 08/30/2010 - 08:52 | 552627 bruce wayne
bruce wayne's picture

We already had a major reversal overnight.  Why would we possibly have another rally today?

Mon, 08/30/2010 - 08:57 | 552638 cossack55
cossack55's picture

UHHHH.  DUUUHHHHH.  Its Monday

UHHHH.  DUUUHHHHH.  Its  August

UHHHH.  DUUUHHHHH.  Its another circus.  Yippee.

Mon, 08/30/2010 - 09:00 | 552642 101 years and c...
101 years and counting's picture

It's Monday?

You mean MFM?  The same MFM where the funds need to liquidate another 2-4 Billion in holdings due to redemptions?

 

 

Mon, 08/30/2010 - 09:41 | 552714 firstdivision
firstdivision's picture

33 Liberty buys double of what is going to be liquidated.

Mon, 08/30/2010 - 10:54 | 552819 Boilermaker
Boilermaker's picture

I was actually thinking more along the lines of triple...but, the concept is true either way.  They are going to ramrod the shit out of it again today.

Mon, 08/30/2010 - 09:01 | 552648 bruce wayne
bruce wayne's picture

We bounced off of support on Friday and rallied hard.  All short term technicals pointed to a continued bounce going into Monday.  Futures gapped up hard and didn't just partially retreat, they retreated completely.  We lost over an 8 handle on the S&P since 11:00 PM last night.  Now you think that we are going to pump again?  Less than 12 hours later?  Last night was very significant, it signalled a change from the sideways market we have been in since May.  Risk is to the downside.  Trust me, others noticed too.

Mon, 08/30/2010 - 09:52 | 552724 firstdivision
firstdivision's picture

Also Benny and Timmay noticed to. 

Mon, 08/30/2010 - 09:12 | 552659 Sudden Debt
Sudden Debt's picture

because Paul the german squid said so. He used to do the predcitions for the WK 2010 and now works for the FED.

 

http://2.bp.blogspot.com/_rStNisZvyww/TD6fBnZrl5I/AAAAAAAAATs/QMoeQIiBa9Q/s320/paul+the+squid.jpg

 

Mon, 08/30/2010 - 20:16 | 554005 StychoKiller
StychoKiller's picture

Looks more like an Octopus to me.

Mon, 08/30/2010 - 09:10 | 552660 Sudden Debt
Sudden Debt's picture

-

Mon, 08/30/2010 - 09:10 | 552661 Sudden Debt
Sudden Debt's picture

 

Mon, 08/30/2010 - 09:15 | 552670 firstdivision
firstdivision's picture

I suspect we will bounce 10 pts off of the days low easily.  Too predictable with this lack of volume since they need to pump it come hell or high water since next week the big boys come home to trade.  But yes I am in agreement that the news from Japan was huge and we have had significant moves.  I am being cynical as last week we had drops, then 10+ moves upward throughout the day. 

Mon, 08/30/2010 - 10:55 | 552821 Boilermaker
Boilermaker's picture

+10, totally agree. 

They'll do it because, frankly, they can.

Mon, 08/30/2010 - 08:57 | 552634 billwilson
billwilson's picture

Any thoughts on how the extension of unemployment benefits on July 22 fed into the picture. Would backlogged checks have been received before month end?

Mon, 08/30/2010 - 09:42 | 552715 firstdivision
firstdivision's picture

Where do you think the 0.2% came from ;)

Mon, 08/30/2010 - 09:03 | 552649 MiningJunkie
MiningJunkie's picture

"The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."  

John Galt (Atlas Shrugged)

Mon, 08/30/2010 - 18:47 | 553872 Quonk
Quonk's picture

Reminds me of the beautiful but often overlooked 9th Ammendment:

"The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

Unfortunately the first, second, and fourth are the only ones with big money puppeteers thus they are among the few that the average American can cite with even a modicum of accuracy.

Mon, 08/30/2010 - 09:10 | 552662 Cpl Hicks
Cpl Hicks's picture

JFC.... my PCE just pulled ahead of my DPI, effectively killing any chance that my PSR would make a recovery this summer!

WTF

 

Mon, 08/30/2010 - 09:16 | 552673 Sudden Debt
Sudden Debt's picture

did coke went up in price again this month?

Mon, 08/30/2010 - 09:37 | 552707 Eally Ucked
Eally Ucked's picture

WTF index hit all time high at 73.345, SDR (shit dispersal rate) is also at all time high 63.5.

Mon, 08/30/2010 - 16:09 | 553579 MichaelG
MichaelG's picture

LOL index testing 50DMA resistance.

Mon, 08/30/2010 - 09:49 | 552721 Agent P
Agent P's picture

"Excuse me, sir. Seeing as how the VP is such a VIP, shouldn't we keep the PC on the QT? 'Cause if it leaks to the VC he could end up MIA, and then we'd all be put on KP"

Mon, 08/30/2010 - 11:57 | 552945 Cpl Hicks
Cpl Hicks's picture

"GMV"...if I'm not mistaken.

Mon, 08/30/2010 - 09:27 | 552692 lizzy36
lizzy36's picture

The impotence of central bankers is on display this fine Monday morning.

Mon, 08/30/2010 - 09:36 | 552704 mophead
mophead's picture

Buy the dip, bitchez!

Mon, 08/30/2010 - 09:39 | 552709 arby63
Mon, 08/30/2010 - 09:48 | 552720 centerline
centerline's picture

Back to school spending IMO.  Kids need clothes, supplies, backpacks, etc.  These days, public schools don't provide squat.  Parents buy all the consumables aside from toilet paper.  Look for the numbers to roll off from here as people tighten belts again to get things under control before the holiday season rolls in (along with a lot of year end, new year costs that come due for many).

Mon, 08/30/2010 - 10:18 | 552762 MilleniumJane
MilleniumJane's picture

Things must not be as tight where you're from.  I have had to buy both toilet paper and facial tissues for our child in addition to regular school supplies.  If this year is anything like last year, he will come home with flyers begging for additional supplies. 

Mon, 08/30/2010 - 10:38 | 552791 centerline
centerline's picture

We had to buy facial tissues for sure.  I could actually be wrong about the toilet paper here since my wife did the shopping!  I just saw the list briefly - put it down quick to avoid a freak-out.  There must have been at least 30+ items required.  Over $100 a kid just in supplies.  Then of course there is clothes, shoes, etc. - would be less painful if I was just taken into an alley and mugged once.  Rather it has been a couple of weeks of Saturday/Sunday back-to-school spending.

Mon, 08/30/2010 - 11:10 | 552852 Chump
Chump's picture

Sounds like reason #449312 to homeschool...

Mon, 08/30/2010 - 10:06 | 552742 Waterfallsparkles
Waterfallsparkles's picture

I think the increase in spending could be that Households are doubling up.  Children moving back with their parents.  Familys losing their homes moving back with their Parents.  With reduced housing and utility costs it frees up more money to be spent.

Being a Landlord my Landlord friends and I have been wondering were all the Tenants have gone.  Our conclusion is the doubling up of Households.  Roomates and people moving back with Mom & Dad.  Less spent on Housing and more to spend elsewhere.

Mon, 08/30/2010 - 10:37 | 552787 Incubus
Incubus's picture

Ah... the basement-dweller generation; the chortles of millions of bank-fed pseudo-affluent kids have become resounding silence as they march towards mommy & daddy's house.

Mon, 08/30/2010 - 11:05 | 552840 Azannoth
Azannoth's picture

The financial day of reconing is close no use being thrifty now

If I was American and had a choice between saving and spending lets say 1000$ I would just look at the trillions the government is borowing each year, and I would throw the towel 'ALL IN!'

Mon, 08/30/2010 - 11:58 | 552948 JR
JR's picture

“Consumer” spending, meaning “the money that people pull out of their paychecks and bank accounts to pay for domestically-produced goods.and services,comes to only 40% of the total of the Bureau of Economic Analysis (BEA) so-called ‘personal consumption expenditures,” not 70%.

To understand the discrepancy, you have to know what goes into PCE.  For one thing, it includes expenditures that never pass through the hands of households, such as government expenditures on health care costs.  “In fact, only about (roughly!) 15% of healthcare spending is ‘out of pocket.'”

Here’s an article written in August of 2009 that addresses the issue: Is Consumer Spending 70% of GDP?

 Consumer Spending is *Not* 70% of GDP by economist, Michael Mandel. Take a look.

I opened up this morning’s NYT and see the big headline “Retailers See Slowing Sales in a Key Season.” And I just know that we are about to have another round of “consumer spending is 70% of gross domestic product, so blah blah blah blah of course we can’t recover unless consumers start spending again.” (Not in the NYT story, to their credit, but you can find similar quotes everywhere you look).

Blah blah indeed. As a textbook author, there are few things that frost me more than hearing “consumer spending is 70% of gross domestic product,” because it perpetuates two very large and very misleading untruths.

First, the category of “personal consumption expenditures” includes pretty much all of the $2.5 trillion healthcare spending, including the roughly half which comes via government. When Medicare writes a check for your mom’s knee replacement, that gets counted as consumer spending in the GDP stats.

At a time when we are wrangling over health care reform, it’s misleading to say that “consumer spending is 70% of GDP”, when what we really mean is that “consumer spending plus government health care spending is 70% of GDP.”

Second, an awful lot of those back-to-school dollars are going to imported clothing and school supplies (how many of those laptops and iPods do you think are made in the U.S.?). A dollar of consumer spending does not translate into a dollar of domestic production.

In fact, the whole way that the BEA presents the GDP statistics points the public debate in the wrong direction. GDP stands for “gross domestic product”—that is, domestic production. But the breakdown of GDP is into expenditures categories—personal consumption expenditures, government consumption expenditures, etc.

I think we need to move towards presenting GDP in terms of production, rather than spending. We need a shift from the consumer to the producer as our main unit of analysis.

 

Mon, 08/30/2010 - 12:14 | 553001 ColonelCooper
ColonelCooper's picture

I live in an area that doesn't necessarily seem as hard hit as some; we are a poorer rural area and sort of live in a perma recession.

I was at the bank today taking care of some things, and my banker said things are starting to show up hard.  People are bringing their cars in and leaving the keys.  People are trying to borrow against any possible equity they can roll over.  Amazingly, people seem to have forgotten that the 60,000 in credit card debt they rolled into a second or third mortgage counts in their debt to income.  They also seem surprised that being "underwater" means the ATM has had its plug pulled.  Business as usual though, because it seems that six year loans on used cars with 150,000 miles are still the norm. 

"Recovery Summer" my ass.  

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