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Income And Spending Both Miss, Savings Rate Jumps To Highest Since February, Major Historical Downward Revisions To Income

Tyler Durden's picture




 

And another ugly economic data point. June personal income was just released at 0.1%, on expectations of 0.2%, and down from a revised 0.2% (previously 0.3%). Personal spending was far worse than expected, coming at -0.2%, down from a revised 0.1%, and missing expectations of 0.0%. PCE Core was the last metric missing, coming at 0.1%, down from 0.2%, down from a downwardly revised 0.2%. Just as importantly, as in the case of GDP, there were major downward historical revisions: "Personal income was revised up $69.1 billion, or 0.6 percent, for 2008; was revised down $244.7 billion, or 2.0 percent, for 2009; and was revised down $167.5 billion, or 1.3 percent, for 2010... For 2009, downward revisions to personal interest income, to personal dividend income, and to nonfarm proprietors’ income were partly offset by upward revisions to rental income of persons and to farm proprietors’ income.  For 2010, downward revisions to personal   interest income, to nonfarm proprietors’ income, to supplements to wages and salaries, and to personal current transfer receipts were partly offset by upward revisions to rental income of persons, to wages and salaries, and to farm proprietors’ income." In other words, the "rental income" that offset downward income revisions came exclusively from the $50-100 billion squatters' rent annually "generated" from homeowners not paying their mortgages. End result: a surge in the savings rate to 5.4% from 5.0%, the highest since February 2011, as consumers retrench across the board.

 

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Tue, 08/02/2011 - 08:43 | 1516219 Debt Rolling
Debt Rolling's picture

A new recession has begun. And when people expect it the least, as always.

Tue, 08/02/2011 - 08:43 | 1516221 Mike2756
Mike2756's picture

Wealth effect!

Tue, 08/02/2011 - 08:46 | 1516230 equity_momo
equity_momo's picture

Eh? Who here , or who with a brain , didnt expect another recession? Assumuing we even left the first.

 

This is as predicatable as the sun rising in the East and setting in the West.

Tue, 08/02/2011 - 08:50 | 1516249 SheepDog-One
SheepDog-One's picture

Ive certainly been saying it all along thru the 'green shoots' for 2 years, we never left the recession, just papered over it a bit.

Tue, 08/02/2011 - 08:56 | 1516284 Debt Rolling
Debt Rolling's picture

We did left - at least, statistically - the recession, even if it was a temporary move based on government pumps.

Now we are entering a contraction even the BLS will be forced to recognize, and it rings like the "end game". The bailouts of 2008-2009 were just not conceived for a stall, even less for a double dip.

Tue, 08/02/2011 - 09:31 | 1516430 dbach
dbach's picture

I agree that there was probably no plan B, just more of the same cheerleading and printing probably, with diminishing marginal returns.

Tue, 08/02/2011 - 10:01 | 1516522 spiral_eyes
Tue, 08/02/2011 - 10:04 | 1516524 spiral_eyes
spiral_eyes's picture

[sorry for double post]

Tue, 08/02/2011 - 10:23 | 1516606 ElvisDog
ElvisDog's picture

Governments can always "exit" a recession if they want to, because deficit spending adds to GDP. If you want to hit a certain GDP figure, just adjust the size of the deficit. China does the same thing with their construction spending. If the current 12% U.S. deficit were reduced to a more historically-normal 3-4%, we would be staring at a 9% contraction in GDP.

Tue, 08/02/2011 - 09:29 | 1516420 SteveNYC
SteveNYC's picture

I'm wondering how much the top 5% - 10% are distorting the "saving" numbers. There is almost no possible way for anybody outside the top 10% to "save" money from wages, living at or below the poverty level to save expense would be a necessary condition to doing so.

Tue, 08/02/2011 - 08:51 | 1516260 Sudden Debt
Sudden Debt's picture

At least everybody got a good vacation rest. Batteries back to 100%!

I do think more people are aware of it than back in 2008. But if they prepared accordingly....

 

Tue, 08/02/2011 - 08:54 | 1516275 papaswamp
papaswamp's picture

Main street never left the recession....the $16+ Trillion thrown at the economy is quickly wearing off for the markets now and reality is setting in.

Tue, 08/02/2011 - 09:05 | 1516330 Sgt.Sausage
Sgt.Sausage's picture

New? When did we leave the last one?

Tue, 08/02/2011 - 08:43 | 1516222 HelluvaEngineer
HelluvaEngineer's picture

Diebold's gonna have to push out some new code if Obama's gonna be reelected.

Tue, 08/02/2011 - 08:55 | 1516282 Iriestx
Iriestx's picture

Betweent he welfare queens and the illegals he's going to grant amnesty to next year, he's got a victory locked up.

Tue, 08/02/2011 - 08:45 | 1516224 orangedrinkandchips
orangedrinkandchips's picture

wait....the stupid dipshits are NOT buying the $2.65 CUP OF COFFEE!!!! shit, remember when it was..."hey brother can you sparea  dime for a cup of coffee?"....And while I am ranting today...fuck gatorade. Hydration? SNP! It is fucking sugar water with artificial coloring! So, you get more dehydrated BUT your blood sugar goes to the moon! It is fucking worthless all under the guise of stealth hydration.....no. H20 people....it's the best thing on earth.

 

Never will I ever ingest gatorade again in my life.

Tue, 08/02/2011 - 08:47 | 1516238 HelluvaEngineer
HelluvaEngineer's picture

but it's got what plants crave!

Tue, 08/02/2011 - 08:49 | 1516245 caerus
caerus's picture

Gatorade - The Thirst Mutilator

Tue, 08/02/2011 - 08:51 | 1516264 tinsmith
tinsmith's picture

" 'Lectrolytes! "

Tue, 08/02/2011 - 08:51 | 1516252 TaxSlave
TaxSlave's picture

Ha, you drank that stuff?   Why??

BTW, it's not sugar.  It's high fructose corn syrup.  Diabetes in a bottle.

Tue, 08/02/2011 - 08:50 | 1516256 SheepDog-One
SheepDog-One's picture

But its got electrolytes!

Tue, 08/02/2011 - 08:55 | 1516283 Sudden Debt
Sudden Debt's picture

It kind of reminds me of a movie where everybody only drinks that stuff for the electrolytes :)

the president was a porn star and all. That movie was so stupid I just had to watch it :)

Tue, 08/02/2011 - 09:01 | 1516315 goldsaver
goldsaver's picture

http://youtu.be/-Vw2CrY9Igs

Brawndo is what plants crave!

Tue, 08/02/2011 - 09:01 | 1516317 KenShabby
KenShabby's picture

Charlie Chaplin and those Nazis. Lol

Tue, 08/02/2011 - 08:57 | 1516292 papaswamp
papaswamp's picture

try powerade zero....no sugar...no crash...unlike the markets hoping for more Fedorade which is loaded with sugar.

Pedialyte is also good. Yea it's for babes and tastes nasty, but good electrlyte replacement.

Tue, 08/02/2011 - 09:02 | 1516319 Bob
Bob's picture

Hey, I've heard this one before--take it in for the touchdown, WaterBoy:

http://www.youtube.com/watch?v=Um0tEvQ5gVM

Tue, 08/02/2011 - 10:22 | 1516602 Newsboy
Newsboy's picture

1.2 liters of water (or a quart and 2 cups)

2 level tablespoons sugar (sucrose)

level half teaspoon salt

juice of a lemon or lime for flavor

This is an optimum oral rehydration solution. It is slightly more optimum if you use glucose instead of sucrose. It is slightly more optimumer with level 1/4 teaspoon baking soda and level 1/4 teaspoon potassium chloride also added. Not necesary.

Actually the stuff they sell at HEB grocery stores dooes not have high fructose corn syrup, and is more ideal than Gatorade.

All of them have more sugar than they should, easier to sell.

This stuff was not cooked up by the Florida gators.

It is derived from the World Health Organization Oral Hydration Solution.

That was devised to save the lives of people in India, dying of diarrhea, who were too poor to afford IV fluids.

That's not as good for advertising to sell an overpriced product.

Tue, 08/02/2011 - 08:46 | 1516228 slaughterer
slaughterer's picture

Downward historical revisions to 2008-2010 matter little right now. 

The miniscule decline in personal spending is just people saving up for their holidays later in the summer.

 

Tue, 08/02/2011 - 08:52 | 1516267 Fazzie
Fazzie's picture

 I wont junk you, but I think a lot of vacations are going to be scaled back/called off due to lack of disposable income. 

 We will know the end is near when households are forced to buy only one Ipad and downgrade their netflix service. This is grapes of wrath 2011 style.

Tue, 08/02/2011 - 08:46 | 1516229 Hansel
Hansel's picture

"partly offset by upward revisions to rental income of persons"

Pimpin' is easy!

Tue, 08/02/2011 - 08:56 | 1516286 SheepDog-One
SheepDog-One's picture

Pimpin IS easy, no doubt.

Pimps up, ho's down.

Tue, 08/02/2011 - 08:46 | 1516232 Debt Rolling
Debt Rolling's picture

Expect the mainstream newspapers to be filled with reports of a 2008 redux in 3 months. For now, the GDP is already contracting, but the Zeitgeist needs to catch up later with this fact. 

Tue, 08/02/2011 - 08:47 | 1516233 Fazzie
Fazzie's picture

I hear the thundering of hooves in the distance as the bag-holding BTFD bulls realize theye been had and stampede for the exits.

 Looks like the soft patch has turned into quicksand. Get ready to dust off your Dow 10000 hats!

Tue, 08/02/2011 - 08:47 | 1516234 caerus
caerus's picture

everyone should immediately run out and buy some lulu yoga shit.../sarc

Tue, 08/02/2011 - 08:47 | 1516235 doomandbloom
doomandbloom's picture

QE3

Tue, 08/02/2011 - 08:49 | 1516244 Mike2756
Mike2756's picture

Do ya really wanna jump?

http://youtu.be/BOP6uMTYaM8

Tue, 08/02/2011 - 08:47 | 1516236 orangedrinkandchips
orangedrinkandchips's picture

Niggas With Attitude (NWA) said it best....years ago..."it's all about a salary not about reality..."

Tue, 08/02/2011 - 08:55 | 1516280 wang (not verified)
wang's picture

and to think Dre and Ice Cube are major players in the biz today and essentially mainstream

 

Tue, 08/02/2011 - 09:03 | 1516324 Sudden Debt
Sudden Debt's picture

HAHAHAHA!! YOU'RE PICK RULES!!!

+1000!

Tue, 08/02/2011 - 08:47 | 1516237 TaxSlave
TaxSlave's picture

Enjoy your servitude, drones!

 

 

Tue, 08/02/2011 - 08:47 | 1516239 EscapeKey
EscapeKey's picture

"rental income" that offset downward income revisions came exclusively from the $50-100 billion squatters' rent annually "generated" from homeowners not paying their mortgages

Since these missing payments are included in the consumer spending/savings rates, doesn't this effectively book the same revenue twice?

Tue, 08/02/2011 - 08:49 | 1516242 slaughterer
slaughterer's picture

All the bears should lay on heavy shorts today on this miniscule data drop before the ADP miss tomorrow.  /sarc.  

Tue, 08/02/2011 - 08:59 | 1516306 Mike2756
Mike2756's picture

It was a buying opportunity!

Tue, 08/02/2011 - 08:50 | 1516251 Cdad
Cdad's picture

Personal spending was far worse than expected, coming at -0.2%, down from a revised 0.1%, and missing expectations of 0.0%.

Revolution of the Closed Wallet!  It is good to see the foot soilders swelling.  No better way to take down an unrepentant banking cabal...then to simply reject consumer discretionary spending.  The ripples flow out from there to hit the value of their assets.  

And to think...Simon Property Group is sitting near its ALL TIME HIGHS.  I hear a purring sound coming from the IMPLODE-O-METER!

Tue, 08/02/2011 - 08:52 | 1516268 SheepDog-One
SheepDog-One's picture

Brother Cdad, can ya spare $8 for a burrito?

Tue, 08/02/2011 - 08:57 | 1516293 Cdad
Cdad's picture

Prices have increased there, Dog...now over $9...and more than $12 when you include the Novartis products required to clear your colon afterwards.  What a deal!

 

Tue, 08/02/2011 - 09:04 | 1516325 SheepDog-One
SheepDog-One's picture

Damn!

Tue, 08/02/2011 - 09:29 | 1516417 Larry Darrell
Larry Darrell's picture

I assume you already have the $5 for the chips and queso and $3 for the drink.

With tax, that'll be $17 bennie bux please.

Tue, 08/02/2011 - 09:49 | 1516494 Cdad
Cdad's picture

...plus the cost of the Novartis products...for a grand total of $20.

Sweet!

Tue, 08/02/2011 - 08:50 | 1516255 max2205
max2205's picture

In other words, the "rental income" that offset downward income revisions came exclusively from the $50-100 billion squatters' rent annually "generated" from homeowners not paying their mortgages. End result: a surge in the savings rate to 5.4% from 5.0%, the highest since February 2011, as consumers retrench across the board.

 

The ULTIMATE in Numbers Trickery

Tue, 08/02/2011 - 09:00 | 1516310 Sudden Debt
Sudden Debt's picture

Saving 5.4 dollars on every 100 dollar somebody makes isn't exactly what I call saving money.

It's more like they forgot the empty the pockets of their jeans when they put it in the washing machine and found it again when they put on that pant again the next month.

Saving money means saving at least 30% of your income.

 

Tue, 08/02/2011 - 10:29 | 1516637 ElvisDog
ElvisDog's picture

I was reading the comments on a Krugman column yesterday (I find them perversely entertaining). One passionate reader wrote that way to eliminate the deficit was to increase government spending, because it would create jobs and workers would pay taxes to the government. This reader apparently never realized the math - spend $100, get maybe $25 back in taxes, does not balance. It's amazing how ignorant people are of basic mathematics.

Tue, 08/02/2011 - 11:02 | 1516722 Spitzers Black Socks
Spitzers Black Socks's picture

But you're forgetting the multiplier, which has to be be what, 6 or 7? So you're really getting $600 or $700 of income and therefore collecting more like $150 to $175 in new taxes. Look at the deficit reduction! Plus everyone gets a pony, or if you're really deserving, a unicorn!

Tue, 08/02/2011 - 08:55 | 1516279 tom
tom's picture

negative nominal PCE is very much a sign of recession

Tue, 08/02/2011 - 08:56 | 1516287 Re-Discovery
Re-Discovery's picture

Stag-fla-ssion

Stagnation + Inflation + Recession

Tue, 08/02/2011 - 08:59 | 1516307 topcallingtroll
topcallingtroll's picture

If this is the start of a contraction it should effect everything that is not that liquid.  Gold rising in a contracting money supply environment would be the true test.  Right now it is still riding fiat's back, or at least anticipation of an increased money supply.

Tue, 08/02/2011 - 09:07 | 1516338 firstdivision
firstdivision's picture

Stop saving, spend everything.  It's the only way we can keep the economy afloat.  Don't worry about your future, it is all about right now.  Buy an iPad or two, own at least 3 cellphones, and buy a new car every 2 years.

Tue, 08/02/2011 - 09:09 | 1516349 SheepDog-One
SheepDog-One's picture

Well Im spending on things like ammo and outdoor gear, food you can store...leave me out of the food riots and bank runs, no thanks!

Tue, 08/02/2011 - 09:21 | 1516391 firstdivision
firstdivision's picture

Why would there be bank runs once they declare the dollar dead?  Now riots yes.

Tue, 08/02/2011 - 09:37 | 1516453 equity_momo
equity_momo's picture

How else are the sheep going to heat their home?

Tue, 08/02/2011 - 10:05 | 1516536 Sudden Debt
Sudden Debt's picture

I still remember back in 2001 when this ordinairy guy came on television saying he bought a 10K Rolex to support the economy....

I mean... the idiot didn't even realize Rolexes are made in Swiss... :)

So everybody who spends doesn't support the US economy, but mostly the Chinese economy... just saying.

 

Tue, 08/02/2011 - 09:11 | 1516356 Archimedes
Archimedes's picture

Well truth is we have been in a Depression for the last three years and it has been papered over by the Government.

The Technical number for a Depression is a 10% drop in GDP. And if you look the US Government is currently financing 12% of GDP via deficit spending. So once they stop the deficit spending the economy contracts by 12% and then some more as the multiplyer effect takes hold. Probably crashing the economy by 20-25%.

And as far as the "Savings Rate" being 5.4%, that is pure bunk. The Government counts savings as Disposable Personal Income -Taxes - Expenditures = Savings. So people paying off their credit cards or debts is counted as savings too. Obviously this money is not sitting in a bank as excess surplus. This is also proven in the fact that less than 25% of Americans are confident they could access $2,000 within 30 days! America has some broke ass Motherf**kers!

Tue, 08/02/2011 - 09:51 | 1516500 Seasmoke
Seasmoke's picture

wait , is that 75%+ are not confident they could access $2000 in 30 days !!!!!!!!!!!!!!!!!!!

Tue, 08/02/2011 - 10:38 | 1516658 r101958
r101958's picture

Exactly correct Archimedes. Also, is there really anything keeping them from fudging the books even further by stealing from the past to add to the present (or future)?

Tue, 08/02/2011 - 09:11 | 1516361 espirit
espirit's picture

The numbers have been massaged for so long that when there is need for reset, bankster cronies have to get net short first before the takedown.

Last algo out is the bagholder, hahahaha!

Tue, 08/02/2011 - 09:14 | 1516372 midtowng
midtowng's picture

That sounds a little bit more like reality. I remember arguing with a Green Shooter a couple years ago about salaries, saying that I didn't believe the numbers were really going uo.

Tue, 08/02/2011 - 09:20 | 1516389 docj
docj's picture

This is all "unexpected", no doubt.

Here's what I've noticed around me - restaurants that used to be busy on weeknights are empty, and where you had to wait on weekends now have tables on demand or a 10-minute or less wait. Stores are ghost-towns - except when the EBT cards get filled at midnight (yeah, it's true, not an urban legend). If 6-Flags New England is any indication, traffic is WAY down at theme parks. I've not yet had any trouble finding a hotel room, even at last minute, for business travel, and I can book a reward room for my family pretty much anytime anywhere I want - in the middle of the summer.

Yeah, that's bullish.

Tue, 08/02/2011 - 11:11 | 1516751 Spitzers Black Socks
Spitzers Black Socks's picture

I see this whenever I travel, but the truly depressing thing is that here in DC where I live, things are good. Restaurants are packed, the stores seem to be moving product, etc. Our political class has no clue, because to them it is unexpected: the government is still paying their salaries, their house values have only dropped slightly, if at all, and they have trouble getting a table on a Tuesday night.

Tue, 08/02/2011 - 09:23 | 1516399 dwdollar
dwdollar's picture

It's accelerating.  Local mall traffic is down significantly despite it being back to school season.

Tue, 08/02/2011 - 09:24 | 1516401 dcb
dcb's picture

we need to do a krugma, and drive inflation into the 20 plus percent range. that w2ay each person will spend all they have each day because it will be more expensive tomarrow and it will help the econoomy. I call it the bernanke krugman path to prosperity

Tue, 08/02/2011 - 09:27 | 1516411 glenlloyd
glenlloyd's picture

I just love how we're now seeing these massive prior period revisions. Unfortunately no one's talking about the original guestimates for the fabrications they were.

A lot of people who got into arguments about this stuff really are vindicated now that we see some of these downward revisions.

I'm hearing more people talk about fabricated numbers now, I think it's finally hitting home that most of what comes out of the BLS at least is BS.

Tue, 08/02/2011 - 09:32 | 1516433 Cole Younger
Cole Younger's picture

The last thing this government wants is people saving. Consumer economies don't do well if people don't spend. The debt deal hasn't passed the Senate and the projections are all ready way off.

Tue, 08/02/2011 - 09:46 | 1516479 Seasmoke
Seasmoke's picture

its amazing how much you can save when you stop paying the fraudulent mortgage........and now if you stop spending, you will have so much money, you will not know what to do with it all !

Tue, 08/02/2011 - 09:46 | 1516480 chistletoe
chistletoe's picture

That's so funny.

the common man is wrong every time.

five years ago, he was falling all over himself trying to buy

the largest Mcmansion that he could, zero down and subprime ARM.

Housing prices collapsed and he got wiped out.

Now, he's learned his lesson and he's putting his money into the bank,

where it will shortly be wiped out by hyperinflation.

Why do I feel like I'm surrounded by midgets?

Tue, 08/02/2011 - 09:49 | 1516493 dis-stressed
dis-stressed's picture

Does anyone besides me think its a bit odd that we are seeing these massive time series revisions in gov't statistics all at once? 

Tue, 08/02/2011 - 09:55 | 1516512 dwdollar
dwdollar's picture

Nope, not at all.  That's exactly what you would do to build the case for QE3.

Tue, 08/02/2011 - 10:06 | 1516543 espirit
espirit's picture

Have to reset the baseline when overwhelming disbelief in the numbers is the status quo.

Crooks are net short by that time.

Tue, 08/02/2011 - 10:44 | 1516671 r101958
r101958's picture

Or, it is what they do to pad current and future numbers. What would happen if you took the -1.5% GDP revision to the first quarter and actually lopped it off of the second quarter? Answer: Contraction.

Tue, 08/02/2011 - 10:14 | 1516566 ArkansasAngie
ArkansasAngie's picture

The green spray paint is wearing off and revealing the rot.

Washington has to be removed

We need to unelect the lot. 

The debt ceiling had to be passed so that Bernanke could monetize it.  You can bet that when Geithner has to play catch up the Fedury will have to buy it and give the money to the banksters to hold and pay bonus with.

 

Tue, 08/02/2011 - 10:40 | 1516662 vast-dom
vast-dom's picture

would that be under the matress savings cause how can bitchez savings go up when biyatches don't get no interest?

Tue, 08/02/2011 - 11:40 | 1516838 robertocarlos
robertocarlos's picture

Debt, deflationary, death spiral. Savings are up because paying off debt is counted as savings. People are deleaveraging.

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