Monday, June 27, 2011
First up: BEA's Personal Income and Outlays for May. There look to have been some downward revisions for April.
Look at real (chained 2005 dollars) PCE. That has a lot to do with the escalating rise of money in Other Deposits on H.8. Most households probably are experiencing falling real incomes and pretty sharp increases in the their bill for basics, so they respond by cutting more discretionary spending.
Smaller businesses aren't doing too well:
Proprietors' income decreased $1.7 billion in May, in contrast to an increase of $3.2 billion in April.And our economy becomes ever more dependent on government payments!
Farm proprietors' income decreased $1.3 billion, the same decrease as in April. Nonfarm proprietors' income decreased $0.4 billion in May, in contrast to an increase of $4.5 billion in April.
Rental income of persons increased $3.3 billion in May, compared with an increase of $2.9 billion in April. Personal income receipts on assets (personal interest income plus personal dividend income) increased $10.0 billion, compared with an increase of $6.0 billion. Personal current transfer receipts increased $9.3 billion, in contrast to a decrease of $1.8 billion.
I don't understand how all the big outfits can be predicting Q2 GDP so high even after cutting their forecasts down a percent and a half. Real growth in Personal Consumption Expenditures is absent the picture, and just by looking at H.8 (do they???) you can tell that everyone didn't run out and blow the wad in June.
The main problem right now for the economy is food prices and the rise in service costs, but that isn't going to evaporate.