Personal income decreased $10.8 billion, or 0.1 percent, and disposable personal income (DPI) decreased $23.6 billion, or 0.2 percent, in October, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $32.7 billion, or 0.3 percent. In September, personal income increased $64.3 billion, or 0.5 percent, DPI increased $62.1 billion, or 0.5 percent, and PCE increased $23.8 billion, or 0.2 percent, based on revised estimates.
Real disposable personal income decreased 0.2 percent in October, in contrast to an increase of 0.4 percent in September. Real PCE increased 0.3 percent, compared with an increase of 0.1 percent.
This is a large disconnect; a spread of 0.5% between income and spending, with income negative.
In other words people increased spending into decreasing incomes. While the BEA claims they adjusted out the shutdown in the government sector they didn't (and can't) on the private side.
This is a bad report but again, I don't know if I can look at it as a "real" result..... so I'll wait for next month.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.6 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.5 percent.
The revision is pretty-much all inventory build (which had better be sold through this quarter -- think Grinchmas) and non-residential fixed investment (construction.)
Personal consumption was revised down and real final sales (that is, actual consumption) were down from the second quarter to +1.9%.
Now here's the embedded problem in the report: current production profits were down to +$38.3 billion from +$66.8 in the second quarter. Current taxes also decreased as expected, and dividends also decreased, although most of that was due to Fannie's transfers decreasing.
Worse, domestic profits were down to about a third of the 2nd quarter increase.
That's going to flow through to earnings.
This month the story is a bit different -- computers and comms both turned down, violating the trend that had appeared to be established. These are leading indications for hiring activity, and one of the more-important subsets of this report in my work.
The rollover was especially pronounced in the computer arena -- so much for the "replacement cycle" that everyone has been predicting.
Non-defense capital goods excluding aircraft were down 0.2% on shipments and -1.2% on orders, the second negative month in a row. This is the important figure from a standpoint of the macro economy, and two months doesn't make a trend -- but three does, and we'll get the number either confirming or refuting it right in the middle of your eggnog-induced fog.
Pay attention next month.
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, declined from 19.8 in October to 6.5 this month (see Chart). The index has now been positive for six consecutive months. The percentage of firms reporting increased activity this month (30 percent) was greater than the percentage reporting decreased activity (24 percent).
Hmmm... here's the problem with the survey, although positive overall.
Priced paid was up to 29.9 from 21.7 while prices received was down from 14.2 to 10.0. That's bad, and what's worse is that unfilled inventories are down, inventories built (not good when you don't have unfilled orders for them!), number of employees was basically flat (+1.1) but hours worked were down to -8.6, meaning a net loss of working hours.
All of the internal views of this are negative. In addition to weak demand you have cost-push on pricing and the employee's point of view is deteriorating as his workweek is being cut.
The market seemed to think that this was good in the usual "up is down, more QE good even though we now know that it's not translating into increased buying power and working hours."
After finding out that Census made up some of the employment report feed data do you believe this report? Because if you do October was a good month on a retail level.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $428.1 billion, an increase of 0.4 percent (±0.5%)* from the previous month, and 3.9 percent (±0.7%) above October 2012. Total sales for the August through October 2013 period were up 3.9 percent (±0.5%) from the same period a year ago. The August to September 2013 percent change was revised from -0.1 percent (±0.5%)* to virtually unchanged (±0.3%)*.
Looking at the detailed data gasoline was pretty-much flat (and given the decrease in gas prices this translates in a material increase in gallons sold) and sporting goods were down -- but everything else had a solid increase on an unadjusted basis.
Make of it what you will; the market liked it although the reaction was muted.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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