Both Zero Hedge and TBP have been saying we are in a recession for months, if we ever really left the first one. Now the official talking heads are confirming the fact for the mindless masses. Then this morning, we get confirmation of how bad things really are. Personal income, consumption and savings rate information was reported. I love to ignore the press releases and go right to the data. Here is the link:
Here are my observations:
- Wages and salaries are actually falling, and when you take into account inflation they are falling hard.
- Interest income continues to fall as Bernanke destroys the lives of millions of senior citizens dependent upon interest income.
- It still cracks me up that government transfers from the productive in society to the unproductive is considered income in their calculations. Government transfers are now 18% of all personal income.
- Disposable income has declined, but spending increased, so the savings rate is in rapid decline to 4.5%.
- Americans are still spending $10.8 trillion per year, or 72% of GDP. Remember the storyline about Americans becoming austere and reducing their spending? Total bullshit. This consumer society will go down in flames before Americans put away their credit cards.
- Consumer debt is rising, so people are making up for their declining income by using their credit cards. That can’t possibly go wrong again. Right?
Sorry folks. I know it is supposed to be fun Friday, but this baby is going down. Anyone with their eyes open can see the disaster before their very eyes.
ECRI’s Achutan Says US Is “Entering A New Recession”
Submitted by Tyler Durden on 09/30/2011 07:59 -0400
Last year the ECRI index was the bete noir leading indicator of the market: while the index clearly indicated the US had entered a recession, its creator Lakshman Achutan consistently refuted the findings of the index, instead pushing a contrary view that the US was in fact growing. Then came QE2 and with it s 9 month suspension of reality. That time is over, as is Achutan’s ongoing attempt to deny facts. As of a minutes ago, the ECRI’s head told Bloomberg Radio that the U.S. is “tipping into a new recession.” “He added: “We don’t make these calls lightly. When we make them, it’s because there’s an overwhelming objective message coming out of our forward-looking indicators. What is going on with the leading indicators is wildfire; it’s not reversible.” As Zero Hedge first said months ago, when it finally extracts its head from between its gluteui maximus, we expet the NBER to proclaim the re-recession as having started in June/July.
We will get the Bloomberg Radio interview as soon as possible.
US Consumer Taps Out: Personal Savings Rate Drops To Lowest Since December 2009
Submitted by Tyler Durden on 09/30/2011 08:44 -0400
The August Personal Income and Spending report is out and while there were some modest surprises in the data, namely a drop in Personal Income of -0.1%, on expectations of an increase of 0.1% (and an adverse revision for July data from 0.3% to 0.1%), while Persona Spending was in line with expectations at 0.2% (previous revised from 0.8% to 0.7%), the biggest news of the day is that the US consumer is getting tapped out, with spending coming entirely from savings: the savings rate dropped from a revised 4.8% (previously 5.0%), to 4.5%, the lowest since December 2009.
August income components are not pretty, in fact they were pretty damn ugly:
Private wage and salary disbursements decreased $12.2 billion in August, in contrast to an increase of $23.8 billion in July. Goods-producing industries’ payrolls decreased $1.3 billion, in contrast to an increase of $6.3 billion; manufacturing payrolls decreased $2.9 billion, in contrast to an increase of $5.8 billion. Services-producing industries’ payrolls decreased $10.9 billion, in contrast to an increase of $17.5 billion. Government wage and salary disbursements increased $0.4 billion, in contrast to a decrease of $1.8 billion.
And what is even worse is that based on other personal income, the primary source of “income” was and continues to be the squatter’s rent where not paying one’s mortgage effectively translates into income:
Rental income of persons increased $8.3 billion in August, compared with an increase of $8.1 billion in July. Personal income receipts on assets (personal interest income plus personal dividend income) decreased $5.7 billion, compared with a decrease of $5.8 billion.
Lastly, the government was not very generous last month: the result – a tapping of consumer bank accounts.
Personal current transfer receipts decreased $7.1 billion in August, compared with a decrease of $10.7 billion in July. Government social benefits to persons for Medicaid decreased $10.5 billion, compared with a decrease of $13.6 billion.