The BEA’s Personal Income and Outlays report shows Personal Consumption Expenditures rose 5.6% in June and Real PCE rose 5.2%
Key Points
- Real PCE rose by $623.0 billion increase in June. This reflects an increase of $273.7 billion in spending for goods and a $362.1 billion increase in spending for services.
- Within goods, the leading contributor to the increase was spending for clothing & footwear.
- Within services, the leading contributors to the increase were spending for health care as well as food services and accommodations.
- Personal saving was $3.37 trillion in June and the personal saving rate—personal saving as a percentage of disposable personal income—was 19.0 percent.
- The PCE deflator (measure of inflation) for June was 0.4%. Excluding food and energy the PCE deflator was 0.2%.
- The PCE deflator rose for 0.8% from June 2019. Excluding food and energy the PCE deflator rose 0.9% from a year ago.
PCE and Real PCE June 2020
PCE and Real PCE 2007-Present
PCE and Real PCE vs February 2020 and June 2019
- February PCE: 14,877.4
Billion - February Real PCE: 13,402.4 Billion
- June PCE: 13,851.2 Billion
- June Real PCE: 12,517.5 Billion
- PCE Percent Change From February: -6.89%
- Real PCE Percent Change From February: -6.60%
- PCE Percent Change From June 2019: -4.83%
- Real PCE Percent Change From June 2019: -5.54%
Trouble Brewing
Consumers can spend but income is about to dry up.
Over 30 Million People About to Lose Unemployment Benefits
As noted on Sunday the Clock Just Ran Out on $600 in Weekly Unemployment Benefits.
Roughly 30 million people are receiving some form of pandemic aid.
Cutback Details
- The GOP proposes to cut the enhanced unemployment benefit from $600 to $200 per week through September. That is in addition to what recipients get from states unemployment insurance.
- The GOP also proposes to set the maximum assistance at 70% of a worker’s previous wages, with a cap of $500 per week.
Those with no pay or little pay will be hammered this week.
“So Far Apart on Covid Deal That We Don’t Really Care”
These are huge numbers, especially those who received no pay at all.
Nonetheless, Trump says “We are So Far Apart on a Covid Deal That We Don’t Really Care”
Philosophically Speaking
Philosophically, people should not make more being unemployed than employed.
Politically speaking, the Republicans just stepped on a landmine.
“We Don’t Really Care” – That Says it All.
Over 62 Million People Had No Pay Last Week
Yesterday, I commented Over 62 Million People Had No Pay Last Week
Those are not-retired people who reported having no pay last week.
87.333 million people expect an income loss in the next four weeks. Income loss is by household, not individually.
Data is from Household Pulse Surveys by the Census Bureau.
Click on the above link for five related charts.
Mish
We have stagflation thanks to the stimulus from PPP, UI and bailouts in general.
consumer spending is up. no but’s, please.
We Thought It Was Just a Respiratory Virus
We were wrong.
It is an autoimmune virus that adjusts itself and attacks in the most efficient way. It may be the perfect virus and makes one wonder if it was manmade.
???
….because the specks of nothings called humans, have proven so singularly good at making perfect stuff????
Aside from humans giving birth, the entire canon of all things created by all humans, don’t even begin to approach the level of perfection displayed by a single fruit fly. Heck, not even a single coronavirus.
And it’s not even close. “We” not only don’t know how to come close to designing anything as sophisticated as either of them. We don’t even know how to go about thinking about how to come up with a process which may lead us in the right direction. Both are simply so far beyond our capacity of even hope to comprehend, that they may as well be the work of a God infinitely more potent than us. Of course, dumb little nothings like us, are equally out of our league wrt deterring that as well.
It is possible it may have been evolved accidentally from a lab after we tinkered. We arent perfect but we have no way of truly knowing how viruses evolve and adapt so quickly because we cannot do the same. We really need some divine luck soon.
I suggest everyone Google “SARS-CoV-2 furin cleavage site” to find a lot of information that suggests that the GOF (Gain of Function) research, going on at the Wuhan lab and supported by Dr. Fauci by policy and funding, was quite “successful” in producing a virus modification not found in any purported precursor viruses … with the only real question remaining being how it came to be present outside the lab … which unfortunately was known for quite a while to have sloppy sub-standard security protocols/enforcements.
Look guys. We know the coronavirus is not a hoax because of hospitalizations and deaths.
The recession however is a hoax because consumers can afford to throw money on unnecessary stuff like entertainment. Chip sales are up big. Ad sales are strong. Where is this recession? Businesses like restaurants and airlines are struggling no doubt, and some people working for those industries should be helped with means testing, but everybody else should not be getting free money especially if they don’t keep up with obligations such as paying rent.
I would suggest the government pays rent directly to landlords. There should NOT be any cash giveaway. Every expense has to be justified. Netflix OUT. Amazon Prime OUT. Extra cell phone plan, OUT. Video Games, OUT.
I don’t think the average American is going to respond positively to such a punitive grounding. I mean all the things you listed represent literally TENS of dollars. Are the unemployed meant to sit around flagellating themselves for being so lame?
They should be given education credits. #LearnSomethingNew as program without any support is a JOKE, but people should use their free time to learn something new. And the government should support people who genuinely want to find something new.
Books are cheap. There should be credits for those.
TENS of dollars? WTF? An iPhone is 500 plus. And chips are not tens of dollars. People don’t buy chips. They buy computers, etc, and those are hundreds of dollars.
Muppets are using this crisis as a crutch to avoid doing something productive. Those should not be supported.
Be BEST!
Don’t know what you mean. Not sure why people have to tolerate other people stealing?
If that’s the case we should ask God to forgive our bankers?
Really it costs more than tens of dollars. By the way how does the average high school or college kid afford the latest IPhone and sleeve tattoos. In NYC guys all wear tank tops with full sleeve tattoos and likely have a $200 a month gym membership.
who or how does the stuff mention get paid for. Sleeve tattoos, new iPhone, late model SUV when you have buses and subways certainly are now a necessity.
I don’t have any ink, drive a paid off 2012 Honda, own the Samsung s20 5g ultra mentioned above for $58 a month for 24 months
Big deal if people don’t eat out. Going “out” was a luxury as late as the 1970s. The credit bubble that started in the early 80s with rates going low is what caused the consumer to go hog wild and spend money they didn’t have. Maybe Covid is teaching people that they can do more with less and that it is okay to stay home and watch movies. Netflix and Video games are much better entertainment than spending $50 for dinner. That is 4 months of a netflix subscription. I don’t care if awful chain restaurants of America go out of business. It was terrible unhealthy food anyway. The first step to healthy eating is to stop eating out.
They don’t go out, but Uber Eats is also going gangbuster. That’s also a luxury.
Yep. The cost of eating out is way higher than watching movies at home on Netflix or playing games on a console. One of the reasons the American economy is suffering more is because we have the most restaurants per capita. A large part of the service economy was restaurants and rose over the last 3 decades.
The senate just said screw it for the next few days. The latest is Pelosi and Trump are trying to negotiate the next stimulus bill and leave the republicans out of it which from what i’m reading is legal.
The Senate still has to vote on any bill.
I hope the Senate rejects all proposals to increase the stimulus. They should reduce it. People are flush with money. They should also be required to pay all back rents.
… and given a sharp kick in the beans, like we’d do in the old days.
Why isn’t the economy fully opened, and anyone that is afraid or vulnerable isolated?
Who is not in favor of this and why?
No consumption issues when people can splurge on iPhones and crap.
Consumers are flush. Recession is a hoax.
Consumers are as flushed as the government is …
Exactly. They are flushed.
Chip sales lead the economy and it’s going gangbuster.
If you can afford to spend on unnecessary stuff, you are bullish about your future prospects.
As I said, iPhone sales were flat for SEVERAL quarters when people had jobs. They jumped 8% the last quarter, when we were supposed to have the greatest “depression” in history. Explain that. Don’t steal other people’s money to feed your consumption.
Do you need a cellphone? Yes, but a 500 plus BRAND NEW iPhone. No.
Throw muppets to the wall. Grind them to dust.
An iPhone is $1000 plus. My Samsung s20 5g ultra cost $1399 plus tax but 8 am paying $58 a month. The ‘latest and greatest iPhone’ doesn’t even have 5g
Even worse then. As I said, muppets have tons of money. No more bailouts.
The white house offered continuing the $600/week for 4 months. Rejected by democrats. I guess they want it to last forever.
The White House isn’t a party to the negotiations of a conference committee between the House and Senate. Speaker Pelosi and Majority Leader McConnell are, and McConnell has stated that he will not support additional aid extensions at current levels under any circumstances.
Trump cannot “offer” anything because he isn’t part of the legislative process. All he can do is sign or veto. He doesn’t write legislation.
Good lord, Americans need to turn off FOX and start learning about the basics of how the country works.
Gee, someone went to civics class. In the real world, Presidents negotiate with congress all the time on legislation in order to come up with something they will pass and the president will sign.
Oh look, a Trump supporter lecturing people on “the real world.” How amusingly non-self-aware!
Never mind a lot of spending fiscal stimulus related (and waning) … some consumers about to be hit by 2 x 4 when they come off forbearance / moratorium.
Landlords / Lenders for the most part want missing payments back quickly.
Another fly in the ointment re forbearance. As mortgage rates tank to all time lows, those who took forbearance option can not refinance until they pay back all of forbearance … or have made 3 – on time – payments with restart.
If lenders foreclose, then to whom will they sell the property? When evictions take place, then a vacant house will lose value through vandalism. The streetwise thing to do would be to extend and pretend.
foreclosure will be a SLOW process. Black Knight keeps track of days till foreclosure. Haven’t looked in a while but coming out of last recession the AVERAGE length (at the worst) greater than a 1000 days.
But you can count on any non payments showing up on credit report.
Credit is / will be tightening —> down we go.
They will “short-sale” the foreclosed properties to BlackRock, who will then turn them into rentals.
That’s how life on the Plantation goes.
Didn’t matter to the banks back in 2009/2010. Even a rundown property will likely return most of the outstanding note to the bank.
A lot of bad optics around in Spain also
QoQ
Spain -18,5%
United States -9,5%
Q2 annualised
Spain -55,8%
United States -32,9%
Q2 Annual
Spain -22,1%
United States -9,5%
All courtesy Matthew Bennett on twitter. I just reply here because reply box to article has gone.
Major banks are already returning to 700+ credit scores and 20% down payment requirements. For a typical family home in the USA, that means $50K in cash up front… most borrowers don’t have that kind of money.
Prices will have to come down if houses are to sell.
But they have $1000 at least for the latest iPhone for everyone in the family.
The biggest selling iPhone is the SE, at $399. People aren’t having trouble coming up with down payments on houses because they have smartphones and eat healthy food, they have trouble coming up with payments on houses because wages have shown zero growth adjusted for inflation over the last 40 years, while houses have about tripled in inflation-adjusted price during that same period.
Try over $150,000 down plus closing costs for the average house using your metric. The $250,000 house has gone the way of the 10 cent parking meter
In major coastal metros, I agree. But I’m looking at the entire country, and houses are downright cheap in significant swathes of the country.
It is all part of Trump’s master plan to bring America to its knees.
Pooty poot is pleased with his poodle.
That’s your best defense of Trump. Pretty sad statement. Trump is the big orange baby.
Covid and massive overreaction by states wiping out 20% of GDP is part of TRUMPS plan? Trump had arguably the best economy in history, but his plan was to throw all that away so that he could harm the country he loves and lose the election. Have you ever listened to your own theories?
Meanwhile, the federal government staggers toward shutdown on September 30th wit no budget in place.
WTF is wrong with these people ?
“WTF is wrong with these people ?”
They are almost all lawyers. For lawyers, deadlines are a tool to be used in negotiating. For lawyers, injury to others caused by inaction is something to look forward to, as long as the cause of the delay can be plausibly blamed on your opponent. Lawyers were hated even in Shakespeare’s time, as is reflected in his FSQ, “The first thing we do, let’s kill all the lawyers.”
Lawyers are necessary to negotiate a stack of entirely arbitrary “laws” in rough proportion to how thick, and how arbitrary, special-case-ridden and invasive that stack is.
If we just stuck to the ten commandments, we pretty much wouldn’t need any of them, as the local priest could handle it all before lunch on Monday. And while that may be going a bit too far in a complex and intertwined society, there not a doubt in the world that we could, without it causing any problems, do away with 90% of “laws.” And hence 90% of lawyers. And also, of the 10% remaining, cut their income, wealth and political influence by 90% as well. With no meaningful harm done to anything.
If if they are lawyers they have no practical experience. They are politicians and sycophants is what is wrong with them.
Expect another continuing resolution to kick budget into lame duck / next year.
A preferred tactic by “leaders” is to wait till last moment and force down rank and file throats (vote YES or we’re here for Christmas).
Why bother with a “budget” when you know you’re going to spend $4 $TRILLION more than what’s in it?
If the government is shutdown can there be an election ? It is probably something that has been in the works for awhile. Trump is using the Putin playbook circa 2004.