U.S. Economy: Consumer Spending Rises as Incomes Gain

[denem]

Source: Bloomberg

June 26 (Bloomberg) -- Consumer spending rose in May as benefits from the Obama administration’s stimulus plan spurred a jump in American incomes, a sign that efforts to revive the economy are starting to pay off.

The 0.3 percent increase in purchases was the first gain in three months, the Commerce Department said today in Washington. Earnings climbed 1.4 percent, the most in a year, driving the savings rate to a 15-year high. Another report showed consumer sentiment rose in June to the highest level since February 2008.

Government efforts to restore the flow of credit and prop up incomes are making it possible for consumers to spend even as unemployment climbs to levels last seen in the early 1980s. At the same time, the wealth destruction caused by the housing slump may force households to keep rebuilding savings, indicating an economic recovery will be slow to develop.

Read more: http://www.bloomberg.com/apps/news?pid=20601068&sid=an7UdA7Bo8xg

---

I've noticed with posts suggesting positive news about the economy, some negative responses bordering on rage. I'm not sure why. Is it that the TARP/Stimulus strategy was so morally and ideologically flawed that any perceived success 'sends the wrong signal', or perhaps a belief that only an economic cataclysm can break the mold of the powers that be?

Hopefully it's is more that conditions on the ground don't match the 'sunny' news: the raw injustice that the burden falls, as it does in recessions, on those least able to bear it.

The highest consumer confidence since February 2008 is newsworthy, but I guess it will find some derision here: Obviously bogus - 'The sheeple are idiots'.

[sarcasmo]

1. I am curious as to who's income has risen, other than the people getting bonuses at AIG?

[hobbit709]

2. Ours dropped about 20%

Once again they prove Mark Twain's statement. "There's lies, damned lies, and statistics."

[No Elephants]

40. And my former partner's favorite--"Figures lie and liars figure."

[glowing]

4. I'm wondering the same thing. When I got my "tax increase" in my check, I didn't

get a raise, since I got the meager increase already. This year things are costing more than last: all of our insurances increased.. on top of that, my hubby lost days at work for a while.. and he hasn't seen overtime, like he used to get, in a really long time. Its killing us. I don't buy anything more than I need, and sometimes not the things I do need. On the weekends when the kid is at his mom's and my hubby and I are on opposite shifts, I don't eat all that much. This morning I had a bagel, first thing I've eaten in 2 days.

[fasttense]

20. Glowing, you have got to eat!!!

If you don't eat and keep your strength up how will you be able to take care of anyone?

There are cheap foods out there. Rice and beans are cheaper than processed foods. Buy them raw/dry and cook them from scratch. Soak the beans overnight, put them in a crook pot the next day and cook them all day. Flavor them anyway you like. Rice takes 15 to 20 minutes to cook and you really don't need to flavor them, just add the flavored beans.

Not eating is not the answer to saving money. My husband and I have vowed not to turn on the air conditioner until it gets 90 degrees F or higher (our electric company is trying to f**k us over by raising our rates over 30%). Our last electric bill was $68. It's surprising how comfortable the temperature is during most of the day.

[glowing]

29. I'm used to it. I've been on crazy schedules like this since college days.

I've always been "on the go" since I was 18. A few missed calories won't kill me. Its not like I don't have some to spare. There hasn't been a week in my life where I haven't worked 60hrs in the last 12 years (or 40hrs and college). I hate to say that the "American Dream", whatever that is, is completely dead. A college education only put me in debt. Science is just not a very well paid profession... Especially Marine/ Environmental Science (something I feel is very important, if you kill your planet, you kill your home.) AND I hate rice and beans. Its ok, I've been doing this "non-eating" weekend thing for 5yrs now. Hasn't killed me yet.

[No Elephants]

41. You don't know what not eating may be doing to your liver, among other things. Food pantry, food

stamps, honey. Please. Or trim the budget some other way. Cell phone, maybe? Whatever. Food HAS to come first.

[ixion]

3. okay, when you drop a few trillion into the economy, you're bound to a see a reaction

of some sort.

You mention people responding with rage. My response is not an angry response, but a cautionary one: The problem has not been solved. Stimulus money is bound to provide a bounce in spending. That is just simple economics.

But so is this:

- Banks have yet to write down the value of their assets.

- The US real estate market is still in meltdown mode.

- We are now more than 14 trillion dollars in the red.

- The US job market is still hemorrhaging jobs, and US wages are still depressed because of off-shoring, and H1-B visas.

- We're still spending hundreds of billions of dollars on our illegal invasions of Iraq and Afghanistan, and are moving into Pakistan.

- We're still borrowing more than 2 bln a day, just to cover interest payments on our debt. Let me say that again: EVERY DAY we BORROW (increase our debt), just to cover INTEREST payments on our 14 Trillion+ debt.


This is the reason that I become annoyed when people start talking about recovery. We're not recovering from anything. We're just sliding down the tube a little bit slower than we were, but we're still sliding, a fact some people seem to be unwilling to acknowledge. This avoidance is dangerous in the extreme, in my opinion.

I'm not raging, mind you, just trying to point out that what caused the meltdown in the first place is still very much in play, and in fact has been worsened by the stimuli, in the long run.

[OhioChick]

5. Damn good post. n/t

[earthside]

8. "You are correct."

... as Ed McMahon used to say on the Tonight Show.

That we might see a tiny increase in some consumer spending at the beginning of summertime is hardly a "green shot" worth crowing about.

Furthermore, because we have higher intelligence as human beings, what happens immediately needs to be considered with what our actions may precipitate in the future. Doubling again bush's addition to the federal government's debt is going to have a significant impact ... indeed, it re-enforces that truly "We're not recovering from anything." Sadly what we are doing is mostly attempting to re-inflate all the bubbles that have already burst.

I certainly don't want to experience anymore economic pain, but I also don't what to see us deluding ourselves once again into thinking that anything significant has changed in the way America does banking or trades equities or builds houses or out-sources labor or imports goods, so on and so forth.

[Dr.Phool]

14. Wages and salaries decreased by 0.1%.

The increase in incomes was wholly attributed to stimulus checks mailed out in May.

And, I think that was only to SS recipients.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Hyr8Y8uKsk


edited to add link.

[Donnachaidh]

26. that $250 check - they actually think THAT is an increase in INCOME???

jaysus h. kee-rist on a cracker...... :puke:

Umm, are we EVER going to get the real information, and not some fluffed up piece of swill pulled directly from some bureaucrat's ass?

I don't know ANYONE who has had an increase in income. And I received that check, which went to pay bills. No flat screen TV could be had for $250 - sorry. :sarcasm:

[debbierlus]

23. I am damn angry because the borrowed money went right down the toilet

This was a coup and corporate takeover.

[depakid]

28. The nation debt is not 14 trillion dollars

Yet.

In addition, what you want to look in a deep recession at is percentage of GDP, as opposed to raw numbers.

[ixion]

30. ...

:rofl:

[depakid]

34. Well,

if you want to look like an idiot... be my guest.

[ixion]

39. as I said when this started last Sept

it is duly noted that you support the hand outs to Wall St., no matter what the cost. Thank you for your concern.

[TheWatcher]

32. But the bought and paid for Media, which lied to us ALL THE WAY UP TO THE COLLAPSE

about the actual condition of the economy, and the truth about the nature and shape of it, is telling him what makes him feel good, so now they are the Word Of God.

You can't defeat that.

[Dark]

35. "Illegal invasion of Afghanistan"? WTF?

Some points are valid, but right now our government needs to spend money. Slowly, it's going to restore confidence in the economy. Slowly

Everyone wants a quick fix. It's NOT GOING TO BE FIXED OVERNIGHT. Economists are still predicting that the recession will last until early 2010. But people act like the economy should have turned around the second Obama signed that paper.

Oh, and we WERE justified in Afghanistan. Not Iraq though. That was bullshit.

[ixion]

38. Afghanistan was BS, too

The world looked the other way while we invaded a country that arguably has less to do with the WTC thing than the Saudis did.

[PSPS]

6. Here's the thing

I can't speak for everyone but my reaction to stories like this is that they are too much spin and short on reality.

There has, indeed, been an increase in purchasing and business activity. But look at the situation: Many months of sharp decline followed by the smallest little uptick and here's what you get from the media: HEY! LOOK OVER HERE!!! SHINY OBJECT!! HAPPY DAYS ARE HERE AGAIN! NOW IS THE TIME TO BUY!! GO OUT AND SPEND!!!11!!1 MARKET RALLY!!!11!!!

In other words, the derision puff pieces like this garner is because, since there are no improvements in the economic fundamentals to justify any real optimism, the media is just operating in its usual whore mode. They'll print anything so long as it sends a feel-good message that encourages people to incur more debt and, thus, please its advertisers.

WHat about the half-trillion dollars of option ARM's that are going into recast over the next two years? They'll mostly turn into foreclosures as they should, but that isn't a "green shoot." Commercial property everywhere is awash in "For Lease" signs. Look at the drastic cutbacks in services across the country, mostly affecting the weakest among us? What if we get saddled with Obama's version of RomneyCare? Gas is over $3 a gallon. Packaged items you buy at the grocery store are the same price but the package is a third smaller. Unemployment is the highest in decades. Real wages haven't increased in decades.

Anyway, you get the picture. While there may be the occasional slight uptick in some indicator, the situation is still horribly dire with every indicator at historic levels of bad, and the future does not look good. These same indicators will continue their downward trend (or be "revised") later. So the media coming out spinning it like "we've turned the corner" is so horribly flawed that it's ridiculous. But if it tricks some people into buying something on their credit card, it has performed its job and pleased an advertiser.

[denem]

7. I was not suggesting that 'we've turned the corner'

only observing that dire news seems to be more welcome to some.

[PSPS]

9. That's because people generally appreciate accuracy and rational perspective in their "news."

[neverforget]

36. +1 especially when the NAR releases their newest "home sales are up"

propaganda piece and the media swallows it hook, line and sinker. The NAR has been calling the bottom every month since the downturn started and that "now is a great time to buy". They say that every month.

NAR = National Association of Realtors

[Dr.Phool]

15. Here's the real numbers.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Hyr8Y8uKsk

(snip)
“There is some modest improvement to the consumer outlook,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. The stimulus “is performing its function to get income into the system, to get the economy going and to get consumer spending going forward. We’re still, longer term, short on jobs, short on wage growth.”

The jump in incomes last month reflected tax cuts and Social Security payments from the government’s stimulus plan, the Commerce Department said. Without those benefits, wages and salaries dropped 0.1 percent in May, showing the effects of mounting job losses.

Economists had forecast spending would rise 0.3 percent, after an originally reported 0.1 percent drop in April, according to the median of 76 estimates in a Bloomberg News survey. Projections ranged from no change to a 0.6 percent increase.

(snip)

Always dig to the bottom of the pile, when someone is feeding you bullshit.

[Joe Chi Minh]

21. Well that makes your original post troubling. It is so rational and neatly laid

out, and yet you are puzzled?

First of all, the notion that the old "perpetual growth" paradigm can now be seen for the madness it always was, is indeed a relief to many of us; and, yes, the same posters who mock such dubious tid-bits of economic jollification will, themselves, surely have been and continue to be adversely economically impacted by this rolling man-made, economic cataclysm.

So many experts in so many fields have enlightened so many of us non-specialists, (who don't need to understand the micro-level "mechanics"), to appreciate that all the aerial, time-lapse photography provided by the said experts of the site of the overall uncontrolled demolition, make a coherent and compelling whole; so that aleatory "chirruping" from time to time, by way of facile jollification, is like the sick joke about the hospital patient who was offered bedroom slippers when he no longer had need of them.

Is it so difficult to understand why decent people should have been appalled at the casual wickedness of this ultra-capitalist paradigm, and should take some kind of grim satisfaction - with however much trepidation, as victims, themselves - in seeing its demise finally coming to pass, in a manner which lays the blame squarely on its perpetrators? Eventually enabling an incremental building of an economy based on the goal of sustainability, instead of that of the current paradigm of growth fuelled by remorseless rapacity in favour of a ferally predatory few.

Then a poster, such as yourself, writes a very measured post identifying the responses elicited by this issue, expressing puzzlement that a grotesque "chirruping" about micro-fluctuations, "green shoots", as though they were of anything but the most minimal and fleeting significance, draws bitter, satirical responses from posters here.

[TheWatcher]

33. And that of course is pure bullshit.

NO ONE welcomes dire news.

That is usually one of the pet talking points from those who tend to deride others who can see through the BULLSHIT PROPAGANDA the media is feeding everyone about the state of the economy.

"You just want to hear bad news, You want the economy to fail, you're a doomsayer, you're a debbie downer, etc, etc, etc."

It's become quite tiresome.

[Downwinder]

10. I fail to understand how income rose when employment fell.

That means bankrupt and bailed out companies gave raises to those they kept on the payroll. And this is enough to claim recovery?

[Oregone]

16. Every normal worker fired makes the average against upper management rise

What is the higher average: {4,5,4,5,20,100} or {4,5,20,100}? Clearly, its the second number set without doing any calculations.

[Earth_First]

11. Imagine what consumer spending under a public option/universal healthcare program would look like...

I still fail to see the resistance towards a rational healthcare program in this country...

[bluestateguy]

12. because some people like being miserable

They are professional victims.

[Mari333]

13. I buy more at the Dollar Store

maybe thats what they mean by 'buy more'.

[blue neen]

17. We have been a lucky family so far.

Right now my husband and I have secure jobs. We both received raises in the past 6 months. And yes, we have spent some of that money, mostly on our home.

Retail stores are offering terrific bargains right now and if you are lucky enough to be able to afford them, it's a good time to buy furniture, flooring, and appliances.

That being said, we are also trying to save more as our 401K got creamed last year.

[twitomy]

18. My income dropped

100% in May..Yep that stimulus is workin for me!:sarcasm:

[hayu_lol]

19. Oregon unemployment is now over 20%...

local unemployment here in south central Oregon is between 15 & 16%. Downsized last August, I've lost 1/3rd of my income.

Percent of unemployment during the Great Depression was 16%.

Sure am glad things are getting better. Must be the bonuses and golden parachutes on the taxpayer funded financial Wunderkind.

Oh yeah, things are getting better and better.

[CountAllVotes]

22. 20%

:wow:

:kick:

[depakid]

27. That's regional for certain rural areas

Also, Oregon has some anomalies with its workforce. People are still moving to the state, and people who in other states wouldn't have tried to return to work (after having retired for example) have come back into the labor force.

[undeterred]

24. Translation: somebody bought a toenail clipper

with the money from their new job at McDonalds.

[conspirator]

37. funny nt

[madrchsod]

25. "everything is coming up roses".....

ya right.....

[TheWatcher]

31. "but I guess it will find some derision here....."

No, not really.

Those of us who can see what is really going on are just about done with people who are so wedded to Propaganda and Perception Management, that it is a waste of time to deride.

Graze On.

[No Elephants]

42. Some DUers seem obsessed with what other DUers MAY post. Kinda bizarre.

It's a message board, folks. People may disagree with you. Deal with it. And get over yourself.