For the 55th consecutive month, the PCE Deflator came in under the 2% inflation target for the Federal Reserve’s inflation mandate. The Bureau of Economic Analysis reported last week that inflation in November 2016 actually decelerated slightly from its meandering pace set more by oil price base effects than $4.5 trillion on the Fed’s balance sheet. Year-over-year the PCE Deflator [...]
Personal Income and Spending continue to suggest only further weakness. While there is a whole lot of caution necessary when analyzing this data due to its susceptibility to large revisions, there is still only further deceleration on both sides of the consumer. Nominal Disposable Personal Income (DPI) was up just 3.4% year-over-year in September 2016, below the 3.8% average of [...]
The Personal Savings Rate is a rather important economic indication. Because it is derived from the difference between income and spending, it can tell us a great deal about the state of the economy from the consumer perspective. Unfortunately, nobody can say with any degree of confidence what the savings rate is right now, or even what it has been [...]
Spending and wage growth disappointed in September, particularly as incomes continue to register barely any growth. The fact that this stagnation has continued for several years allows commentary such as this: U.S. consumer spending in September recorded its smallest gain in eight months as income barely rose, suggesting some cooling in domestic demand after recent hefty increases. The Commerce [...]
Stocks had a great day today unshaken by whether the manufacturing part of the economy was growing more quickly or at the slowest rate in 13 months. Confusion isn’t part of the asset inflation lexicon. In economic news, the U.S. manufacturing sector had its best gains since October, according to Markit's final Manufacturing Purchasing Managers' Index that rose to 55.1 [...]
With the Chinese manufacturing indications “unexpectedly” disappointing over the weekend it was absolutely no surprise that US estimates of income and especially spending would as well. These overall, broader figures align closely with other indications of a dangerously weak household sector, very much explaining why the rest of the world is screaming about impending contraction. For all that intuitive sense [...]
It should not have come as a surprise to convention that the PCE component of GDP was not going to be leading economic gains. The monthly PCE series has been “better” in later 2014 than the winter, but that is far too narrow a context in which to draw any conclusions. No matter how you measure, American consumers continue to [...]
Personal intuition usually serves well in both economics and finance, which is why, despite all the billions of dollars and amazing efforts otherwise, this business is still an art and not a “science” (even pseudo-). I should have remembered as such the last time I actually reported on a sentiment survey, as the Chicago PMI a few months back tumbled [...]
The balance to all the policy of “good feelings” is the actual ability to spend. Orthodox economics resides on the demand side, which explains much of these persistent problems, yet there is a low degree of realization about getting from A to B. As I said earlier, modern central banks are about manipulating expectations, really feelings, in order to control [...]
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