Posted on 03/01/2013 8:47:12 AM PST by Ernest_at_the_Beach
Today’s economic report has good and bad news, and both are tempered by the effects of government intervention. The Commerce Department reports that personal income dropped 3.6% in January, the worst such monthly decline in exactly 20 years, but that consumer spending seems unaffected:
Personal income decreased $505.5 billion, or 3.6 percent, and disposable personal income (DPI) decreased $491.4 billion, or 4.0 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $18.2 billion, or 0.2 percent. In December, personal income increased $353.4 billion, or 2.6 percent, DPI increased $325.7 billion, or 2.7 percent, and PCE increased $14.8 billion, or 0.1 percent, based on revised estimates.
Real disposable income decreased 4.0 percent in January, in contrast to an increase of 2.7 percent in December. Real PCE increased 0.1 percent, the same increase as in December.
Before we pull this apart, let’s take a look at the AP’s analysis of the report:
The Commerce Department says consumer spending rose 0.2 percent in January. The gain was driven by an increase in spending on services, primarily reflecting higher heating bills. Spending on durable goods such as cars and non-durable goods such as clothing actually fell.
Income growth fell 3.6 percent in January, the biggest drop since January 1993. But it followed a hefty 2.6 percent rise in December. The December gain reflected a rush by companies to pay dividends and bonuses before income taxes increased on top earners.
Analysts surveyed by Reuters forecast income fell by 2.2 percent in January after rising 2.6 percent in December, while spending increased for a second consecutive month by 0.2 percent.
In other words, this was a big miss by Reuters’ analysts. The December increase in dividend payments was an artificial distortion of the market because of the fiscal-cliff standoff, which by that time seemed certain to raise tax rates. If that’s all it was, though, then Reuters’ expectation should have been right in the ballpark. Instead, income dropped by a significantly larger amount than it rose the previous month, which would indicate that real damage has been done by the change in economic policy, at least in the short term, as well as by the general lack of interest in economic growth by this administration in its progressive second-term agenda.
Consumer spending rose, however, which means that the potential for economic growth remains — if we tool our policies to encourage it. This also shows that the mini-apocalypse predicted because of the expiration of the payroll-tax holiday was nonsense. Personal consumption expenditures hit their highest mark (in annual rates, in chained 2005 dollars) in at least seven months, the length of time shown in the tables at the end of the report. By the same measure, January outpaced all four quarters of 2012. The supposed stimulus of the PTR was vaporware, as was the anti-stimulus of its expiration.
The real problem is still stagnant job creation caused by increasing government hostility toward capital and investment. Until we solve that, wages will not rise as labor remains a buyer’s market, and consumer spending won’t continue to improve for long in this environment.
Wouldn’t triple food and double gas prices cause an increase consumer spending?
Don't worry, for the private sector, maybe they'll offer ya some unobtainable phony incentives, commissions and prizes in lieu of an actual pay raise..
Gas and food go up daily....Incomes have been stagnant for 12 years now....
Americans giving canned food for gifts this Christmas...
Meanwhile, government employees retire with lottery style tax paid pensions...yuk yuk...
He’s turning us all into paupers. Bastard.
An unrelenting commitment to permanently onerous taxes, gas prices and regulatory policies makes the Marxist economy structurally locked in a hopelessly bad “new normal”.
I am retired an on a fixed income.
My income hasn’t dropped, but my money damned sure doesn’t go as far
My home and vehicles are paid for and I don’t use credit cards.Food and gas and heating fuel to keep me warm are ripping my budget all to hell.
The price of everything is going up and my retirement salary remains the same . The cushion I had when I retired is about gone, and my savings is paying me almost nothing in interest. It won’t be long before I have to dip into my savings and I am already losing 3% of that a year through inflation.
But there is a recovery Obama tells me so.
they mention the higher heating fuel costs fueled the increase in spending, yet they do not count the cost of gas in the inflation estimations... i am growing to hate my government... more and more.
That's been going on for decades now...Slowly and incrementally. Kinda like our bleeding lawless borders.
The private sector, have watched their standard of living decline, they got economically gang raped, betrayed, lied to for many years...
The tax peons finally noticed the bloated corrupt government sector are still living high and receiving those top shelf retirement lottery style retirement pensions and benefits....All while the working private sector eats cheet sandwiches...
You've got damn good reason.
Government at all level created this epic disaster....From lawless violent borders, to gang banging the American economy, to "Compassionate wars" costing trillions which looted the American treasure, while they kiss the asses of foreign nations, most of which hate our guts.
The walls are closing in. Get ready, people. The big bang will be the stock market crashing by the end of 2013.
And found this link to an article:
***************************************EXCERPT**********************************
By Tyler Durden
Good Interview...at the link....
That’s why in that clip Rush played yesterday Frank Luntz was “depressed”. His low-information focus group seems to put the entire blame on Congress. Meaning if this keeps up the Pubbies are going to be voted out of control of the House in 2 yrs., and the Progressive agenda will get rammed thru on a rocket sled.
“Growing to hate my government”. But, this is EXACTLY the outcome 0bama wants. Fomenting HATRED for the country our Founders created and rallying Americans to then accept HIS tyrannical government over the old one. 0bama’s plan is working. Many entities involved in this plot, including the media who works diligently on blaming it all on Republicans.
I think in 2010 the Baraqqis were drunk with power, didn’t worry about the congressional elections, and got skunked.
I suspect in 2014 that won’t happen. They are converting the Obama campaign machine to function in perpetuity.
http://frontpagemag.com/2013/matthew-vadum/obama-prepares-to-community-organize-america/
It really is. This country will be unrecognizable in 4 years.
Romney would have given us something way better than this.
Finally! At long last, the people are getting what they voted for.Good!
Did you intend a /sarc tag, or am I misreading your intent?
The fact that his plan is working and that he eludes accountability for his wide ranging sabotage tells you that he is not the orchestrator of this assault. He has his army, including the unions and the media, but there’s got to be a consortium behind him which includes Soros.. Maybe ‘Bilderberg’ isn’t such a crazy conspiracy theory after all.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.