Thursday, March 1, 2012

It's The Economy Stupid: Income, Spending & Jobs

Well, at least the income number is increasing.  And call me crazy, but I like that fact that incomes are increasing a little bit more than spending.  And who knows if the jobless numbers are actually accurate, but at least they aren’t getting worse and they are trending in a good direction.



Economic Event


Economic Survey

Actual Reported

Original Prior

Revised Prior

Personal Income






Personal Spending






PCE Deflator (YoY)






PCE Core (MoM)






PCE Core (YoY)






Initial Jobless Claims

FEB 25





Continuing Jobless Claims

FEB 18







Wire: BLOOMBERG News (BN) Date: Mar 1 2012  7:47:06

U.S. January Consumer Spending Rises 0.2%, Incomes Up 0.3% (2)



     (Updates with economist’s comment in fourth paragraph.)


By Timothy R. Homan

     March 1 (Bloomberg) -- Consumer spending in the U.S. rose

less than forecast in January after little change the previous

month, showing a lack of improvement in the biggest part of the


     Purchases climbed 0.2 percent, while incomes increased 0.3

percent, Commerce Department figures showed today in Washington.

The median estimate of economists surveyed by Bloomberg News

called for a 0.4 percent increase in spending and a 0.5 percent

rise in incomes. Warmer weather may have restrained spending on

services such as utilities.

     Households, whose spending accounts for about 70 percent of

the world’s largest economy, may be reluctant to increase

purchases as gas prices continue to climb and home prices keep

falling. Bigger gains in employment and wages may be needed to

give consumers the confidence to boost spending.

     “We’ve seen some pressures on the household sector in terms

of gasoline prices,” said Scott Brown, chief economist at

Raymond James & Associates Inc. in St. Petersburg, Florida. “It

doesn’t look like things are falling apart, but things aren’t

booming either.”

     Projections for spending in the Bloomberg survey of 81

economists ranged from gains of 0.2 percent to 0.6 percent.


                         Jobless Claims


     Fewer Americans unexpectedly filed first-time claims for

unemployment insurance payments last week. Applications for

jobless benefits decreased 2,000 in the week ended Feb. 25 to

351,000, matching a four-year low, the Labor Department said


     Stock-index futures held gains after the figures. The

contract on the Standard & Poor’s 500 Index expiring this month

climbed 0.3 percent to 1,367.8 at 8:46 a.m. in New York.

     Incomes climbed less in January than the previous month,

when they rose 0.5 percent. Wages and salaries increased 0.4

percent in January for a second month.

     Income after taxes and adjusted for inflation declined 0.1

percent in January after a 0.3 percent rise. It was the second

decrease in the last three months. The drop in income helped push

the savings rate down to 4.6 percent in January from 4.7 percent.

     Adjusted for inflation, which are the figures used to

calculate gross domestic product, consumer spending was little

changed for a third month, today’s report showed.

     Spending on services adjusted for changes in prices fell 0.1

percent in January after no change the previous two months.

Purchases of durable goods climbed 0.9 percent after a 0.7

percent gain.


                          Second Half


     Income gains in the second half of 2011 were stronger than

previously reported, the Commerce Department’s GDP showed

yesterday. After-tax incomes adjusted for inflation increased at

a 1.4 percent annual rate in the final three months of 2011, more

than the previously reported 0.8 percent gain.

     In the prior three months, incomes climbed 0.7 percent

compared with a 1.9 percent slump that was initially reported.

Wages and salaries from July through September rose $107.2

billion, up from the $24.8 billion gain initially reported. The

economy expanded at a 3 percent annual pace in the final three

months of 2011, compared with a 2.8 percent estimate. Household

purchases rose at a 2.1 percent rate.

     Today’s figures contrast with other gauges of spending.

Retail sales in January advanced 0.4 percent after little change

the prior month, according to Commerce Department figures last

month. Merchants including Macy’s Inc., Gap Inc. and Target Corp.

cut prices to attract more business during the holiday shopping



                      Consumer Confidence


     At the same time, consumers are becoming more optimistic.

The Conference Board’s gauge in February increased to the highest

level in a year. The Thomson Reuters/University of Michigan

measure of consumer sentiment increased to 75.3 in February, the

sixth straight monthly gain and the longest advance since 1997.

     A firming labor market is lifting Americans’ spirits. The

jobless rate dropped to 8.3 percent in January, and employers

added 243,000 new workers, data from the Labor Department showed

last month.

     Still, that improvement is not fast enough for some

companies like Cracker Barrel Old Country Store Inc.

     “While recent employment data are moving in a favorable

direction, the pace of improvement remains slow, and consumer

spending is still being pressured by higher grocery and energy

costs,” Sandra Cochran, chief executive officer of the Lebanon,

Tennessee-based firm, said on a Feb. 21 conference call. “In

response, many in the industry are focused on promotional



                         Fed’s Bernanke


     Federal Reserve Chairman Ben S. Bernanke yesterday said that

while there have been “positive developments” in the labor

market, Bernanke said it “remains far from normal.”

     “At present, with the unemployment rate elevated and the

inflation outlook subdued, the committee judges that sustaining a

highly accommodative stance for monetary policy is consistent

with promoting both objectives” for stable prices and maximum

employment, Bernanke said in testimony to the House Financial

Services Committee in Washington.

     He also said that a recent rise in gasoline prices “is

likely to push up inflation temporarily” and reduce consumer

purchasing power.




John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph:  225-342-0013

Fx:  225-342-9721



No comments:

Post a Comment