July Personal Income and Outlays
Submitted by
CalculatedRisk on Thu, 08/31/2006 - 8:41am (10 comments)
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Is the consumer spending more due to desire to do so, or are they required to spend more to obtain the same necessary goods that they bought for less last month or last year? Only an accurate inflation gauge would provide the answer. In my mind, the consumer is getting more pinched (less savings) and sellers of unnecessary goods (restaurants, etc)are starting to realize that they have to cut prices to entice customers to spend some of their diminishing spare change.
Also, in MN, statistics just released:
2005 median family income 52K
2000 median family income 47K
Looks good, but after inflation 2005 median income is 6% BELOW 2000.
Consumer resurgence, HA.
About the savings rate, I would think that demographics would affect it. Are any demographic adjustments made to the savings rate calculation? Is my thinking actually wrong? What do professional economists think of this issue?
August same store sales came out at 2.9% yoy. Considering nominal CPI is around 4%, doesn't this implies a drop in consumption in real terms. Am i missing something?
jult52, the savings rate isn't adjusted for demographics. However, based on demographics alone, we would expect the savings rate to be higher than normal - because the boomers are in their peak earning years and nearing retirement age. That is one of the major concerns with the negative savings rate.
neal, I think the consumer is getting squeezed, but we are a definitely a resilent bunch. I expect to see a retail slowdown related to the housing bust - but I think the signs are mixed so far.
Best Wishes.
kaan, you are not missing a thing! This report was for July - and July was pretty strong. But it looks like August will be disappointing.
Best Regards.
Thanks.
Uh, does Bernanke have a idea what will happen to this disposable income when the housing layoffs start and a commodity crash ensues killing the home ATM? Usually unemployment doesn't begin to rise untill recession, but this one seems to be starting already eh CR?
Personally, gas going down doesn't help me much. My car only takes 35 dollars to fill, so it goes back down to 25. Whoop yee,10 more dollars, may as well spend it on a floor show!!!
"This is the sixteenth consecutive month of negative savings."
This just blows my mind.
We're not in a recesssion. We're a terribly rich country (in the aggregate) with a mature economy. We need to be saving in the range of 5-7% of GDP.
My energy bills the last two months have set new all-time highs, for about the same Kwh usage as last year...up by a couple hundred bucks per month. My consumption rose...yay...the economy is saved once again by my consumption.
Needless to say, I've shifted my current spending to account for my past unanticipated spending, but that hasn't shown up in any numbers yet....