The January personal income and outlays report is horrific. Personal Income nose dived -3.6% from December and hasn't seen this big of a monthly drop since January 1993. That's 20 years ago. The blame is being laid on the payroll tax holiday expiration and December did see a rise in personal income also not seen since December 2004. Disposable income is worse. DPI dropped -4.0%, even when adjusted for inflation. Ouch!
The October personal income and outlay's report is not good news. Consumer spending decreased -0.2% from last month, and when adjusted for inflation was a -0.3% decline for October. Consumer spending is another term for personal consumption expenditures or PCE.
Q3 2012 real GDP shows 2.7% annualized growth, revised from 2.0% in the advance report. There was a significant upward revision to inventories, yet consumer spending was revised down. Exports were revised up as trade statistics became more complete. Q2 GDP was 1.25%.
Americans spent more than they earned. That's what's implied in the BEA's September personal income and outlay's report. Consumer spending increased 0.8% from last month, and when adjusted for inflation was a 0.4% increase for September. Consumer spending is another term for personal consumption expenditures or PCE.
Consumer spending increased 0.5% from last month, yet when adjusted for inflation was only a 0.1% increase for August. Consumer spending is a name coined by the press and means personal consumption expenditures or PCE. Real personal consumption expenditures are hugely important to economic growth as consumer spending is about 71% of GDP.
Q2 2012 real GDP now shows 1.25% annualized growth after revisions. The advance second quarter GDP estimate was 1.5%, whereas the second revision reported 1.7% GDP growth. The BEA rounds their final GDP numbers, so the actual GDP reported was 1.3%. When we're grabbing economic crumbs, 0.05 percentage points makes a difference.
What the Q2 GDP third estimate shows is a barely breathing economy. Businesses shed inventories, consumers spent way less, a dramatic swing from the Q2 GDP advance report and investment generally is down from the 1st quarter. Shedding inventories can be a recession indicator. Durable goods spending literally vanished in Q2, also a recession indicator. The drought showed up in Q2 GDP, negatively impacting farm inventories and potentially other GDP components indirectly.
Consumer spending increased 0.4% from last month, in actual dollars and also when adjusted for inflation. Personal consumption expenditures are often called consumer spending by the press. Real Personal Consumption Expenditures, or PCE, are about 71% of GDP. Graphed below is the monthly change in consumer spending.
Consumer spending was unchanged from last month, but after taking price increases into account, decreased by -0.1%. Personal consumption expenditures are often called consumer spending by the press. Real Personal Consumption Expenditures, or PCE, are about 71% of GDP. Real means chained to 2005 dollars, thus adjusted for inflation. Below is a graph of real PCE.
June 2012 Retail Sales decreased, by -0.5%, and this month one cannot blame just falling gas prices. Autos & Parts alone dropped -0.6% while auto dealers, part of Autos & Parts, declined -0.7%. Minus autos & parts, retail sales also decreased, -0.4%. This is the 3rd month in a row retail sales have declined. June Retail sales are up 3.8% from the same time last year.
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