Persona income for June was up 0.2% compared to a Bloomberg Consensus Estimate of 0.3% in a range of 0.3% to 0.5%. Spending rose 0.4% vs a consensus of 0.3% in range of 0.2% to 0.5%.
Highlights
The consumer continues to spend though income isn’t that strong. Personal income, for a second month in a row, inched 0.2 percent higher in June, in contrast to spending which, also for a second month in a row, rose 0.4 percent. The gain in spending was funded to a degree by savings as the savings rate is down 2 tenths to 5.3 percent.
There isn’t much positive movement in inflation data with both the overall PCE index and the core index (ex-food ex-energy) up only 0.1 percent. Year-on-year shows no improvement at all with the overall rate unchanged at plus 0.9 percent and unchanged at plus 1.6 percent for the core.
Turning back to income, wages & salaries did improve a bit, up 1 tenth for a plus 0.3 percent gain. Details on spending show an outsized 0.7 percent increase in nondurables in a gain, however, tied in part to higher oil prices, not increased demand. Service spending rose a very solid 0.5 percent for a second straight month while durable goods fell 0.3 percent in June following a 0.4 percent decline in May, both reflecting weak vehicle sales. Durable goods are a sleeper here for July, possibly bouncing back should vehicle sales prove strong (July unit vehicle sales will be posted through the day).
This report is moderate. The strength in spending needs to continue for the economy but spending won’t have much legs if income doesn’t pick up.
Report Weaker Than Bloomberg Paints
Bloomberg puts a “moderate” label on what a look at actual table data from the BEA Personal Income and Outlays Report shows to be weak.
PCE Price Index Year-Over Year
PCE Month-Over Month
Durable goods prices are down 0.7% from last month and 1.8% from a year ago as incentives required to sell cars increase.
Mike “Mish” Shedlock
Spending rose twice as fast as income… if true (these surveys are only accurate +/- 300%) — doesn’t speak well for the ZIRP/QE committee to screw the world.
Wake us up when the angry mob starts building a guillotine with Bernanke’s name on it.
OK, so what I get from Mish and CDR from the previous posting “how-and-when-does-this-mess-end”, is that there is actually no Natural Enforcing Mechanism to end this money printing of Reserve Currency.
So … who cares, and why care about all these economic headlines? I mean, really …
1) When economy goes bad, the reserve currency nation just print extra $3 Trillions USD/Euro/Yen to buy government sponsored programs and bonds, making sure the mass get fed and entertained at home.
2) When stock market drop, immediately increase the printing. Don’t believe me? Check with JCB (Japan Central Bank) which just expand the stock buying program with more $$, though JCB is already the top holder of all Nikkei listed companies. And never ever sell or exit.
3) The mass sheeple just being ignorant, no outrage to any of above. The poor need (1), the rich need (2), and if the middle class complained about too much tax, hey, Reduce tax! Fed/ECB/JCB would just print and buy the $3 trillions bonds issued!
So really, there is no natural force, e.g. simple math, account balance etc that would end this madness. I am NOT talking about Events which requires prediction.
Austrian School of Economics beaten …. Never could imagine human race can turn out to be so chicken and lazy. Throw all those economic maths out. Long live foodies, entertainment, and Reserve Currency Printing.
PS: I am inspiring my kids to aim for money printing job. Don’t need to bother with Math or Algebra where they have to work so hard to balance the equations and accounts.
“1) When economy goes bad, the reserve currency nation just print extra $3 Trillions USD/Euro/Yen to buy government sponsored programs and bonds, making sure the mass get fed and entertained at home.”
Possibly. But you need the legislature to authorize the trillions in deficit spending (CBO projects FY2016 deficit to be $534 billion). Republicans (i know i know … hardly conservative) control – for now – Congress. They would have to walk back 2009 comments about the $800 billion ARRA stimulus being a huge waste of taxpayer money.
@Sean — (repeated from earlier post)
While the central planners can manipulate prices (in Thai bat or USD) for a little while, there is a cost. If you look at energy costs (that consumers pay, including taxes and fees — not “exchange” prices). If you look at housing prices that few G7 citizens can afford. If you look at education costs in the US. If you look at the disaster pricing that is Obamacare… you are paying a LOT more than you were in 2007.
At the same time, many industries are seeing “stable” or “falling” prices — on essentially no volume. You still have $1000 to spend? Great, choose whatever you like from these empty shelves. No one is going to produce for long at a loss. True in the former Soviet Union. Disturbingly true today in Venezuela.
I don’t know when Atlas will shrug, but Pedro in Venezuela already shrugged (as did Petrovich in Soviet Union).
And I don’t want to alarm you, but your pension (life insurance, IRA, whatever) is only good assuming you can figure out how to earn 8% returns when the economy is “growing” 3% (before interest on debt)…. your retirement was already canceled, even if Bernanke is too much of a coward to admit it.
Central planners lose their power (all of it) once the populace realizes the social contract has been torn up.
Its happening (present tense) in the EU. It already happened in Soviet Union and Venezuela.
sftong,
The natural enforcing factor is confidence. If no one will accept your fiat for real goods and services then reality comes crashing down. The only reason this has persisted so long is that all the central banks are working together. If printing money with reckless abandon was a viable long term strategy would not Zimbabwe be a world power?
Mish, thanks for posting the ACTUAL DATA. The y/y data tells me what I want to know.
The bloomberg article is impossible to follow, as are all the mainstream media mush heads. Are their numbers m/m or y/y? Impossible to know because they cannot write clearly.
Rebating cars to move them off the lot instantly devalues all cars, but most importantly those sold within the 6 months leading up to the beginning of rebating. Those cars sold before rebate started were priced higher, and had a relatively high debt to equity ratio. Now the loan is upside-down, there is more owed on the car than when the car was purchased. The risk of loss of capital in the event of a default has gone up. This extra risk may not be priced into the car section of the bond market, but eventually it will.