Real Disposable Income is Falling at 2008 Rates

Phoenix Capital Research's picture


The biggest single most important item in the GDP report yesterday was the collapse in disposable income for Americans.


Most investors will focus on the drop in GDP growth for 1Q13 and view it as opening the door for the Fed to continue with QE 3 and QE 4 without any tapering in sight.


After all, the markets have believed that bad economic news is good news for the markets for four years based on the belief that a weak economy will mean more money printing from the Fed.


However, the real issue in the BEA’s report on GDP growth was the collapse in real per capita disposable income which fell at a annualized rate of 9.21%.


That is a truly staggering collapse in incomes. The last time we say anything even close to this was in the third quarter of 2008.  


That was right after Lehman failed and the entire economy and stock market were melting down. Buckle up, things are getting worse in the US at a truly alarming rate.


I’ve been warning subscribers of Private Wealth Advisory that the economy was going to turn sharply weaker this year. It’s already begun.


Indeed, while most investors will look at the GDP report as indicating more QE is coming, commodities certainly didn’t get that signal at all. The commodity index continues to plunge diverging wildly from the S&P 500.



One of these asset classes is completely mispricing the economy and the likelihood of more QE. Guess which one it is.


If you have not taken steps to prepare for a market collapse, we have a FREE Special Report that outlines how to prepare your portfolio. To pick up a copy, swing by:


Best Regards

Graham Summers



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dunce's picture

Part of the drop may be the people that have only part time jobs so the employer does not have to provide obama care.  People that are retiring were reported as having an average of $12,000 retirement savings. If that is true they will not be spending much on discretionary goods. Many of the retirees have had to spend their savings waiting for retirement. Economic failure does not have to be rapid, it can be tapered.

Mojeaux18's picture

Real disposable income (Source: Pravda...I mean Fred)

stormsailor's picture

well,  it can't last much longer, but it does.  i don't talk about it to anyone anymore,  they pretend to listen if polite, if not they tell me i'm crazy.


i just keep my supplies fresh, my powder dry, stack up some physical when i can get it at a good rate.  have a below ground hidey hole with an emergency exit, good water supply and some bug-out property in the middle of nowhere if it really gets bad.


i see the misery in the streets everyday, but it seems to increase just a little enough to keep

Mojeaux18's picture

They can extend and pretend for a long time.  We'll see the end coming a lot clearer than now.  Interest rates will go up (far higher than now) followed by inflation.  Then it will hit people when their formerly $5 meal becomes $10, and they have to decide between gas, electric, phone, or cable bills to pay.

jsmfr's picture

Yeah, and it grew at the same rate in Q4 as it fell in Q1.  Income shifting ahead of tax increases (which boosted Q3 a bit as well).  Nets out to a big zero -- which is obviously not too good, but not the disaster that the one-tune idiots at Phoenix Capital claim.

BlankfeinDiamond's picture

Who proofreads this shit?

"The biggest single most important item in the GDP report..." Try using a comma once in a while.

"The last time we say anything..." Uh, you mean "saw".

"The commodity index continues to plunge diverging wildly from the S&P 500." Again, a fucking comma woud be nice.

oddjob's picture

I see you can't decide whether to put a period inside or outside your quotation marks...tough decision.

BlankfeinDiamond's picture

Damn you're dumb. I put them exactly where they needed to be.

cornedmutton's picture

Can we please have your name and Grammar Police badge number?

RockyR's picture

does Phoenix Capital have credibility here? honestly curious.

edit: here as in ZeroHedge

Panafrican Funktron Robot's picture

"does Phoenix Capital have credibility here?"

Roughly as credible as a broken clock.

Quisat_Sadarak's picture

It's hard to know who to believe.  After the 2008 crash, who would you listen to?  Cramer?  CNBC?  or contrarians like Phoenix Capital?   I pay no attention to the former and am inclined to listen to the latter, but man, all doomsday predictions have just been worn out.   Every week its the same thing.... the sky is going to fall soon, buy my newsletter.  

Let me guess, this week the sky is going to fall again.  And it wont.

Next week, oops, this week, definititely, the sky will fall...

Yeah, we know shit is fucked up, but the economy will likely continue on fucked up, until it doesn't.  But who the f- knows when that will be?  Soon, or years away?  Who knows?  


HalinCA's picture

The German Jews politely left all their perosnal goods in their houses when they wer rounded up and put on trains to the gas chamber.


Human nature has not changed and so, the vast bulk of Americans won't wake up until it is way to help.



Never One Roach's picture

But the nicely dressed suited (Armani?) guy on TV who sells mutual funds just told me "consumer spending up, personal incomes soar, and everything looks happy...never a better time then now to jump into the market. He said AAPL looks "cheap" and he expects the Dow to hit 30,000 (maybe more) by end of year.

The pretty TV lady in the low cut above-the-knees flower dress (Ralph Lauren?)  interviewing him seemed impressed, nodding her pretty face in agreement as her eyes drifted to his Rolex watch.



disabledvet's picture

what's the opposite of "rising like a Phoenix"? seriously though...there was a choice at the beginning of the year...small caps (inflation) or treasuries (deflation)...simple as that. and just as simply "small caps have won out." this is in spite of a massive increase in interest rates in just six weeks! so clearly "the economy has just been hit with a gale force wind" with predictable results ("smell the glove" time for commodities...including obviously gold and silver.) interestingly "equities have rallied on this news." so had a valid point at the beginning of the year...and it's even more valid today. is there a bullish case however? i would argue yes...not the least being we are still in a recovery (barely.) inflation is clearly heading south as well. and who get's slammed the most when the Chairman unloads on the debt markets? government of course. "for the private sector they will view this as a trading opportunity." obviously this shows just how independent the Fed truly is...and i have given Bernanke a shout out as a consequence. this gives "taking it to the man" a whole new meaning actually. obviously Japan has been a massive liquidator of treasuries (and he would know this) and it would appear as the Chinese yuan starts to weaken they might well be one as well. did he simply state what he saw? if was a mistake. having said that i don't think the genie can put back in the bottle either. a "spread" has appeared of significant size...this is obviously bullish as...suddenly..."not all debt is create equal" and one will have to start differentiating between the "good debt" (say of large utility) and the "too ridiculous to believe" variety (Apple.) i'm still bullish (though mostly out now) can i say this is a bad thing? excesses in either direction are bad for bull markets. the Fed Chairman has declared himself to be a subscriber to "Qualitative Easing" as well as the "MOARRRR" framework of the past four years. i'm losing money now as a consequence but i fail to see how a narrow bearish.

donsluck's picture

So, bullish but scared? As you are "mostly out now" your actions speak louder than words.

bshirley1968's picture

Thanks for continuing to post these numbers and point out the underlying real world figures that get overlooked most of the time.

I know you take a lot of heat on this site because, like many of us, it seems you are crying wolf.  Fact is the whole system is being manipulated by a bunch of lying crooks who will do and say anything to keep their ponzi scheme afloat a little longer so they feel they have control over the lives of millions.

History has proven that one day the "millions" get tired and remind those "in control" there is a limit to what people will endure.  I don't know how long "they" can drag this out.  I have been amazed at their ability to keep the game going this long........and then I look at the stupidity of the masses today and understand.

Anyway, its kind of sad and fun at the same time.  Sad to see what my once great country has become and fun to watch the roaches scramble in the shadows, the hubris of those on the razor's edge, the arrogance of men who physically couldn't whip my 15 yr old son, "leaders" who couldn't lead a blind man across the street patting themselves on the back telling one another what a great job they are doing, a military that brags about picking on third world countries....for 12 years, a population whose more concerned about the nex Iron Man movie than the future of their posterity, a society that thinks food is a something found at a convenience store and an I-phone is a necessity.........Like I said funny and sad all rolled up into one.

centerline's picture

+1.  Is all about confidence.  Or in the case of the public at large, apathy.

Not hard to see how the levitation works or continues.  Pretty much says that when the tide does turn, it will be ugly.

Amazes me how so few manage to connect even a few dots...  and it only takes a few to paint the broader picture here.

sodbuster's picture

>Amazes me how so few manage to connect even a few dots...  and it only takes a few to paint the broader picture here.<

What??? There's dots!!! Nobody told me there was f'n dots!!! LOL- Ha! Centerline, I don't even talk to people about this stuff anymore. They are clueless, and unwilling to learn. Ooohhhh- DWTS is on!!!


joego1's picture

There will be a day in this country when people with real skills will be worth more than gold. That day is coming soon. I hope that time will not be in the smoldering ruin of civilization.

Central Wanker's picture

There will be a day in this country when people with real skills will be worth more than gold. 


... and if you don't have the skills, you better have some gold. 

BudFox2012's picture

I'm with you on this one.  I hope the real skills you are talking about don't turn out to be raping/pillaging or driving across the desert at 150 mph looking for gas (ala mad max)

Tombstone's picture

Someone's gotta support the welfare crowd.

kchrisc's picture

FEMA camps in 3...2...1...