Nasty is the only way to describe this.

Personal income decreased $505.5 billion, or 3.6 percent, and disposable personal income (DPI) decreased $491.4 billion, or 4.0 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $18.2 billion, or 0.2 percent. In December, personal income increased $353.4 billion, or 2.6 percent, DPI increased $325.7 billion, or 2.7 percent, and PCE increased $14.8 billion, or 0.1 percent, based on revised estimates.

Ouch.

There is a large miss in wages and salaries.  This is being blamed on accelerated bonuses in December ahead of tax increases.  But remember, people were cheering the numbers for December...... hmmmm.

We'll see next month -- if this doesn't rebound....

Income receipt on assets collapsed, as expected, since so much of the dividend income in December was pulled-forward in advance of expected tax increases. 

The "savings rate" collaped to 2.4% from 6.4% last month.  Collapse is the proper word here, folks.

PCE ex-price changes increased 0.1%, essentially zero.  Durable goods were down 0.8%, with most of it being in motor vehicles and parts.

The Price index is claimed to be up 0.1%, or essentially flat.

The crooners all call this a one-off due to the pulled-forward income on tax changes at the end of the year.  We shall see next month whether that excuse holds up or not.

Well look at what we have here:

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.

The index for all items less food and energy increased 0.3 percent in January. This increase offset another decline in the gasoline index and resulted in the seasonally adjusted all items index being unchanged, as it was last month. Increases in the indexes for shelter and apparel accounted for much of the increase in the index for all items less food and energy, with advances in the indexes for recreation, medical care, and airline fares also contributing.

Oh oh.

That woud be a 3.66% annualized increase in core, which ought to perk up your ears.

Let's have a look inside at annualized increases, as we did with the PPI.

The first thing that stands out is that the "target" is "achieved" at a 1.9% core rate annualized.  But....

Shelter, particularly rent, is up closer to 3% while hospital services are up 4.7% and transportation is also up 3%, with insurance up nearly 5%.  The latter is a big perverse effect of QE, in that insurance companies make a fair bit of their money off fixed-income investments.  That's dead, of course.

If you like to eat, eat lamb.  It's down 15% on the year.

Don't eat apples.  They're up 11%. Fruits in general are up 4.6%, and vegetables 3.4%. 

Electronics continued their dive, with TVs off 17% on the year.  Americanus Boobus has his idiot box for another year at an ever-lower price. 

Don't go to college unless you want a textbook shoved up your butt. Their price is up 8% on the year, and the best part of it is that your professor is probably getting a piece of it.  That smile on his face?  It's because he's assaulting you coming and going.

Computers continue their inexorable decline, as do other consumer information items (e.g. cell phones, tablets, etc.)  Bye-bye margins.

And don't start this crap about how "health costs" have "leveled out."  The hell they have.  Health insurance is up 8.6% annualized, damned close to the 9% escalation that has been maintained historically over the last 30 years.  If you believe that it comprises only 0.658% of the total amount of money you spend as a consumer, which is what the government claims, then you're dumber than a box of rocks.

Can't afford a car and need to ride the bus?  That's up considerably more than the so-called "inflation index."  Oh, and that's a laugable 0.264% of your budget too.  Really, for those who actually use it?

Those are the lowlights -- enjoy.

Largely if not entirely-responsible for the nice little dive we're seeing in the market is likely this:

Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”

Disaster?

That wasn't what we were told, remember?  The economy was getting better.  Consumer spending is rising, supposedly.  Things are ok.  The Empire index was good this morning.  Consumer confidence is ok.

Uh huh.  WalMart says otherwise, and they're looking at actual data.

And what that email said is, and I quote:

“Have you ever had one of those weeks where your best- prepared plans weren’t good enough to accomplish everything you set out to do?” Geiger asked in a Feb. 1 e-mail to executives. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

That's easy.  The customers are not in the stores because they don't have any damned money!

Guess who's responsible?  CONGRESS, with its DEFICIT SPENDING.

This results in immediate destruction in purchasing power and that in turn screws the common man blind.

And now you have the results "in your face."

Oh boy, December consumer corn-holding data from The Fed today...

Release Date^*: February 7, 2013

  Consumer credit increased at a seasonally adjusted annual rate of 6-1/2 percent during the fourth quarter. Revolving credit was little changed,  while nonrevolving credit increased at an annual rate of 9-1/2 percent. In December, consumer credit increased at an annual rate of 6-1/4 percent.

Ok, ok, is that true?

And are our young adults getting another reaming?

Let's look.

Yep.  No increase in the revolving debt.  In fact, note that there has been no material increase now for more than a year. 

Now on non-revolving, there is some change.  $5.315 billion, to be exact, with almost an identical amount also going onto student loans.

So it looks like we've got people buying cars -- and overpriced educations -- at least for December.

But they're not charging up their credit cards.  At all.

Interesting.

Uh, this is foreshadowing a nasty Christmas sales season....

Release Date*: January 8, 2013

In November, consumer credit increased at a seasonally adjusted annual rate of 7 percent. Revolving credit increased at an annual rate of 1 percent, while nonrevolving credit increased at an annual rate of 9-1/2 percent.

Yuck.

Let me guess -- all the expansion was in student loans -- again?

Ah, not quite.  There was still some expansion in car loans too.  How nice.

But, Junior is still being bent over the table; the spread between the red and green lines continues to impress (and increase.)

Say thanks to your local University Provost.