Personal Income and Spend: Recession Incoming? in [Market-Ticker]

Posted 2012-06-29 09:10
by Karl Denninger
in Macro Factors

Personal Income and Spend: Recession Incoming?

Personal income increased $25.4 billion, or 0.2 percent, and disposable personal income (DPI) increased $18.5 billion, or 0.2 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $4.7 billion, or less than 0.1 percent. In April, personal income increased $29.4 billion, or 0.2 percent, DPI increased $19.5 billion, or 0.2 percent, and PCE increased $16.2 billion, or 0.1 percent, based on revised estimates.

So we have basically no growth in income (and it's no real growth) and no growth in expenditures eh?

But they claim that "real" PCI and PCE were both up? Bah -- that's all gasoline, or so we're supposed to believe.

Let's look inside.

Personal outlays -- PCE, personal interest payments, and personal current transfer payments -- decreased $7.0 billion in May, in contrast to an increase of $13.9 billion in April. PCE decreased $4.7 billion, in contrast to an increase of $16.2 billion.

That is not good.

I wouldn't call this "recession now", but it is not a strong report at all.

What's going on today in the market is all about the EU "summit", wihch is rather funny in and of itself. The PCE report didn't move anything, really, and the internals show why -- there was deterioration internally, but realistically it's not a disaster.

Yet.

Discussion below (registration required to post)

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User Info	Personal Income and Spend: Recession Incoming? in forum [Market-Ticker]
Aztrader Posts: 6658 Incept: 2007-09-10 Scottsdale, AZ Online	We have noticed a huge drop in business in the past 3 weeks. Every distributor has called looking for orders. I spoke to several dealers and they are seeing the same thing. None of them has ever seen it this slow. Something is in the wind and we just don't see it yet........... 2012-06-29 10:43:58 Permalink
Marcustullius Posts: 224 Incept: 2010-06-12	We can dissect this a bit more. "Personal outlays" = Personal_Consumption_Expenditures + (Personal_Interest_Payments + Personal_Current_Transfer_Payments) April: +13.9 = +16.2 -(2.3) May: -7.0 = -4.7 - (2.3) In both months, (Personal_Interest_Payments + Personal_Current_Transfer_Payments) decreased by $2.3 billion from the month prior. What does this mean? Are people paying out less in interest, and if so, is it because they are paying down debt, or because they are defaulting or declaring bankruptcy? BEA Glossary wrote.. Personal current transfer payments. Payments consisting of transfer payments by persons to government and to the rest of the world. Payments to government include donations, fees, and fines paid to Federal, state, and local governments, formerly classified as "personal nontax payments." Personal current taxes. Includes taxes paid by persons on income, including realized net capital gains, and on personal property. Apparently "PCTP" does not include taxes. I can easily imagine that 'donations' to governments at every level have been diminishing, and also that most of the fees they collect are based on actions (e.g. building an addition to one's home) which have also been diminishing. I can believe that each of the two items were negative, but I've no idea how big each is, and am quite unsure what it can tell us about the economy. Tully ---------- "It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." (Samuel Adams) 2012-06-29 11:49:00 Permalink

BEA Glossary wrote..