Real Spending vs Real Income
Personal Income and Outlays, July 2020
The charts reflect data from today’s BEA report on Personal Income and Outlays, July 2020.
- Personal income increased $70.5 billion (0.4 percent) in July. Disposable personal income (DPI) increased $39.9 billion (0.2 percent) and personal consumption expenditures (PCE) increased $267.6 billion (1.9 percent).
- Real DPI decreased 0.1 percent in July and Real PCE increased 1.6 percent. The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
On the surface, things look ok.
Real Disposable Personal Income (DPI) was down a mere 0.1 percent while consumer spending more than held up.
Personal Consumption Expenditures (PCE), consumer spending, rose 1.6%.
Ominous Picture
This is an ominous picture because the Congressional Covid stimulus expired on July 25.
That’s when the last weekly stimulus check of $600 was sent. As of August 28, consumers will have missed 5 weekly checks of $600 each.
How Many People?
The answer comes from my post yesterday Unemployment Claims are Still Extremely Elevated.
All Continued Claims
Over 27 million people missed 5 weekly checks of $600 each.
Here’s the math: 27 million * 5 * $600 = $81 billion dollars.
That is money consumers don’t have to pay the rent, pay mortgages, or but food.
Some of those checks went to people working part-time. Continued claims represent people not working at all.
Continued Claims
Continued claims are covered employees who worked no hours. That’s at least 14.5 million. But that total does not include gig workers, self-employed, and other workers not covered at the state level.
My best guess is around 20 million people are solely reliant on pandemic assistance. Of them about 6 million have no money coming in at all.
14.5 million have only state benefits and that is not nearly enough to pay the bills.
Congressional Bickering
Congressional bickering over the amount of stimulus has been ongoing for months. Forbes has the latest details as of today.
- According to Reuters, Meadows said the $1.3 trillion bill was offered to Democrats privately.
- In their first conversation in weeks, Meadows and House Speaker Nancy Pelosi (D-Calif.) spoke for 25 minutes via phone on Thursday but did not make any progress towards reaching an agreement.
- Meadows described the call as “25 minutes of nothing,” Fox Business reported, and Pelosi said in a statement that the conversation made it clear that “the White House continues to disregard the needs of the American people.”
- Pelosi also said Thursday that Democrats were “not budging” on their latest offer.
No End in Sight to Bickering
Despite over 20 million people are severely impacted and have been for 5 weeks, there is no end in sight to the bickering.
Two Speed Economy
Financial Cliff Has Started
A financial cliff is not coming up, it has already started. It will show up in the August data accompanied by a jump in evictions and repossessions.
Mish
The Average New Car Loan Is Now Over 70 Months https://jalopnik.com/the-average-new-car-loan-is-now-over-70-months-because-1842624210
“I don’t know what’s gonna happen, but I wanna have my kicks before the whole shithouse goes up in flames” – Jim Morrison
And yet, the average age of cars on the road keeps rising at well. Over the last twenty years, the average age has risen:
Cars – 8.5 to 11.6
Light Trucks – 8.3 to 11.6
All Light Vehicles – 8.5 to 11.6
If vehicles are lasting 3 years longer, having car loans 2 years longer is probably not a problem.
“An imbalance between rich and poor is the oldest and most fatal ailment of all republics” — Plutarch
“A house divided cannot stand.” Abraham Lincoln
“To secure to each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government” — Abraham Lincoln
“Labor is prior to, and . . . superior to capital” — Abraham Lincoln
Of course Lincoln, despite witnessing industrial revolution, never envisioned the implications of AI/Robotics ….
And financial engineering.
Tough to know the real impact of this. Anecdotally almost everyone I know collecting is simply because it pays them a lot to collect and they tend to be second incomes of the household. There is a huge distortion of jobs that pay less than the UE pays that aren’t filled. With that said, entertainment is still a disaster and that’s a lot of jobs.
The United States Is Going Into Hyperinflation https://seekingalpha.com/article/4371490-united-states-is-going-hyperinflation
Thanks for the laugh.
Katchum needs to find another day job.
Deflation coming.
Such a poorly reasoned article. There is record unemployment and therefore decreased demand for goods and services. The Federal Reserve, as well as the federal government, and participating state governments, are attempting to fill the gap. The price of assets are rising, that is indisputable, so be long assets. But to claim that the dollar is losing value, you have to define compared to what? Other currencies whose central banks are doing the same? Oil? Yes, compared to RE in select markets and the stock market, the dollar is losing value. That is the flip side of saying that homes in select markets and the stock market are gaining value. Lastly, what backs gold? It is just a metal that is subject to counterfeiting. Answer: the same thing that backs the dollar, belief in its value. And, the dollar has much more utility as a medium of exchange. Go long assets, stocks, homes, and sure, metals. But don’t stick your head in the sand and believe that metals have some magical intrinsic value, because they do not. It is only the belief by enough people acting on that belief that gold is a store of value that makes it so. That is all.
Hyperinflation is only possible when a country’s debt is denominated in something other than it’s own currency.
Bottom line is that a lot more people are concerned with violence and riots than they are with prosperity. Housing purchases, consumer purchasing, and the stock market all suggest people are not really suffering financially, but they are running away from Democratic run cities and States like the are on fire… I guess some are. The Democrats created and supported this chaos and domestic terrorism and they will be held accountable for it in November.
When the root cause of the problems become the perceived solutions to the problems, the system is destined to collapse.
“No End in Sight to Bickering”
…
I beg to differ.
A couple of things. One, House and Senate in recess till Labor Day. Unless R Senators were to cave to Pelosi there was never going to be a deal in August. Two, both sides have been awaiting August NFP number out September 4th. A good payroll number gives R Senators leverage. A poor number supports Pelosi.
I fully expect a deal of sorts by mid September. It will be sooner rather than later as Congress closes for month of October to head home and campaign.
My significant other has reported E-bay sales down by 50% for every week in August. When extra unemployment money ended, she noticed immediately. Official retail month over month numbers will be telling, if they are allowed to be published.
I watched the Pelosi press address on CSPAN and she was certainly frazzled, but I say all of this is on the GOP. The dems formulated the HEROES Act back in May and it was not till mid July the GOP even responded with a plan of their own that was less than 1/3 the dem plan, and which left the people out entirely, it demanded conssessions on such things as tort reforms and specifically cut out state and local governments that have been badly damaged by Covid, particularly blue states and cities/counties because that is WHERE PEOPLE ACTUALLY LIVE, in urban regions where 85% of Americans reside. It did not address election security, it envisioned no money to keep the USPS functional going into the biggest vote by mail election ever, so that people will have to congregate at polling stations and wait to vote with sick people.
And when Pelosi and the dems offered to slash their plan from $3.4 trillion to just $2 trillion if the GOP would come up from less than $1 trillion to $2 trillion the GOP gave them the bird. The democrats have done all the negotiating they should or can and still serve the people, while the GOP was only ever going to help Wall Street.
So we go over that cliff and see who the voters blame more, because this is in reality a game of chicken with the GOP betting on themselves. And the democrats headed for that cliff know that to cave would damage Americans to the point that going off the cliff will be the least of their problems if the republicans get their way.
Even when the GOP did do something to “help” the average American with their payroll tax holiday of four months they are not helping at all, every cent of deferred tax has to be paid by April 30, so dime for dime what thye get to keep between now and New Years will have to be paid double between New Years and May.
My bet is the GOP is BADLY miscalculating how many people are in deep caca, and yet they (The Fed’s Bullard actually) announced just yesterday the recession is ended, over, we are back to normal economically. So in their view there is no need for any unemployment or stimulus.
Tell that to the 40% of rentrs behind on rent, or the 8% of all mortgage holders that now have to pay the arrears on their forbearance on their homes or lose them. Or the tens of millions with no job or seriously underemployed, or who have no income at all. If they do not starve first the GOP expects them to go to the polls and vote for more of this Trump economy.
RIGHT!
By the way, the Pelosi – Meadows impass that is so widely reported has nothing to do with the senate GOP which is standing by watching while sitting on their hands. Meadows is the White House Chief of Staff so this is all about Trump being the obstruction to any aid to Americans, he just does not want his name on the lack of action because he KNOWS what the yield will be at the polls starting in now in 15 days when PA becomes the first state to begin early voting. Even if he relented in the next two weeks the damage to his brand will be done. So he has Meadows name on it counting on the vast majority of the public not understanding that Meadows takes his orders directly from Trump and Jared and Ivanka.
For those who don’t know Meadows he was a house rep till Trump hired him as Chief of Staff at the end of March when the pandemic was already in full swing. He was the head of the house freedom caucus from 2017 and the ranking member of the oversight committee for 8 days, he is from North Carolina.
for those that think we should not allow lawyers into the house: Meadows falsely claimed to hold a Bachelor of Arts from the University of South Florida for many years in his official biography maintained by the Office of the Historian of the U.S. House of Representatives. In actuality, he graduated from the University of South Florida with an Associate of Arts.
Win-win for the Democrats. Republicans don’t take their offer, the recession goes deeper, Trump loses voters. Republicans accept the officer, Democrats get to say they’re the ones that cared. Trump loses voters. Republican Senate should have taken the offer early. I’m guessing they’re refusal means they want Trump out too.
Jon, smart, that actually had not occured to me. Probably because the GOP never spends a dime except on themselves and Wall Street. So far since Covid started Wall Street/corporations and business have not gotten ten time the money citizens have, but many hundreds of time the sums sent out to people. And the people WOULD have zero except for the dems. The GOP hates the idea of helping Americans but accepted a little of it in order that nobody would mention the TRILLIONS going to business. With no oversight at all.
It was the Republicans that dreamed up the PPT, which was unique in that the money flowed via small business to workers. That was one of the things that kept the economy running. They also kept an equal amount for a slush fund for Wall Street, of course.
The incumbent politicians are scared, for their own jobs, they will pass a bill soon. Biden will lose, and the Democrats are going to suffer losses across the board due to their support of riots and domestic terrorists. The Democrats are making so many strategic mistakes, like keeping Joe in his basement, and ducking the debates, it almost seems as if they they have already conceded the Presidential election. Perhaps that is their strategy, to lose and encourage more riots after the election. If so then their real agenda is socialist overthrow via insurrection. If that is the case, I pity anyone living in a Democratic city or State…..
I have a sneaking suspicion the rug is going to be pulled out from under Trump very soon dooming his chances for reelection. Try as he might to hope and ignore everything and pretend thr happy talk we know it’s not reality. If the big money goes short before the election you will know they dont want him anymore and would rather have Biden even if it means changes to everything. Who are we kidding. Unemployment is closer to 20% and Trump has had too much instability. Even before covid. Investment in the actual investment was negative before covid. That is red flag for every business.
Agree C_O, but I maintain Trump NEVER had a snowball’s chance in hell of “reelection” since there has not been one single Hillary voter convinced he was better for the country. All of her nearly 66 million voters are still going to vote dem in November. But Trump will have only his rabid base voters, I would be shocked if that went over 50 million.
Just my opinion – But I have DJT trending higher … with solid chance at another 4 years. The caveat is if stock market keeps trending higher. If it goes, so does DJT’s chances.
The stock market is doing badly. It is the tech stocks that increase so much they drown out everything else. It is but a casino and red keeps on winning. When it doesn’t it all crashes.
I agree but there is big trouble coming for Trump in September and October. I have my sources. His only chance will be to challenge the election in court. This will extend the lunacy but he wont even be supported by Senate or House Republicans in the end. He will end up either ceding in January or be forcibly removed and play the martyr.
I think anybody who thinks BIden is going to win this, at this point in the game, is seriously deluded. Half a dozen Democrat mayors declaring their support for Trump, Democratic representative (singular) doing the same. White people are still the majority in the US, and most of them must be looking at what is happening in the streets and worrying. DJT is the law and order president. Biden lends tacit support to rioters. The antifa.com website, registered 15 years ago, now points to Joe Biden’s campaign website. No idea if it was really the antifa website, but politicially it looks like Biden and Antifa are in bed together. Most people know their history; they know that revolutions don’t end well for the majoirty of people, and that only the thugs survive. I have £100 on Trump winning. The best hope te left has now is to just stop. Stop the protests. Stop rtying to attack Trump through ht ecourts, stop with the constant media soundbytes. Stop and wait 4 years. Then he is gone. Inflaming the flames of rebellion will do nothing but bring down the US. As a Brit living in England, America has its flaws and the exceptoinalism i see occasionally on these pages is mythical. But it is a dream and a system that is well worth rpresercing. Witout America, the next stop is China. Apologies for the spelling errors. My browser has decided that i can no longer use scroll on this webpage.
You are referring to 6 small town mayors on the range of Minnesota where iron ore has suddenly come back. Those districts weren’t going to go for Biden anyway as they voted Trump in 2016. The mayors are just going with whatever their citizens (mostly white rural voters) are saying for their own political preservation. There may be a few small areas where Trump may be able to hold whatever he got in 2016 but overall Biden will get the 66M votes Clinton got and more. The reason Trump is planning to steal this election is because he can’t win it on merit. Everything is a hoax to Trump.
I finally got my hands on an unredacted copy of the Senate Intelligence Report on the 2016 election and even Republicans know Trump willingly instructed a foreign country to interfere. So he didn’t win that election fairly either. He won’t have a choice but to openly steal it this time. His time is up come October.
Signed,
A 2016 Trump Voter.
” But it is a dream and a system that is well worth rpresercing.”
$27T in debt is not a dream. It is going to be a nightmare when it hits $30T by election day.
Forget overpriced gold,put your cash in what will keep your ass alive, Scar 17 cheaper, add a plate carrier,why?Trump will use the permanently collapsed economy for cover to cancel elections and declare Martial Law and dusk to dawn curfew!
With meager rationing that will be divvied up by percieved obedience to him.
I think it is very much on the cards that Trump will “do something” in October, including a war against a foreign country.
First of all, if he cancelled elections, Polosi would become President on January 21th, so that’s unlikely. Second, the US is getting long of tooth, and a revolution is not only possible, it’s likely, sometime in the next 20 years.
SCAR 17 and cheap should not be used in the same sentence.
What will the riots be like if our currency loses reserve status and takes a dive? It may be time to move back to the farm.
If it wasn’t for the current aggressive FED support, the DJI would be below 20k.
Economic Rebound Defies U.S. Benefit Cuts and Broadly Holds On
August 24, 2020, 5:25 PM
God forbid we have real price discovery. This is a pyramid scheme to keep the 10% and mostly 1% constantly growing richer no matter what. And we are so proud to be paying for it so the rest of the world can see what a real democracy looks like yes?
Last winter was a bust anyway. Folks are hunkering down for this one.
Even the few that still have income.
I still have the same income I had last year, but it does not buy nearly what it did last year, prices are basically meaningless at this point, odd things have doubled or more and things that have not risen pretty much are OUT OF STOCK! Even that old poverety standby ramen noodles have doubled.
Prices on everything have jumped across the board… Compare what you bought on Amazon a year or two ago to now and the prices will be 10% – 50% more
But there is no slowdown in consumer spending occurring. The weekly chain store index is 4.5% higher than a year ago. Every index from shopper traffic to indices from Mastercard and visa show no slowdown in spending.
Remember that the 90% of people who HAVE jobs also got the stimulus check. White-collar professionals who are making six figures and likely have a triple digit IQ know how to invest in the stock market and most are flush with cash from not only investment income but from inheritances when parents/ grandparents kick the bucket
In terms of people ability to spend, you have to keep in mind that, working from home, even with the same income, or less, they may have more to spend because they have much lower expenses. They save money on gas, cars, coffee, food, clothes, cleaners, and many other things.
Companies are also seeing costs go down as well as employees are traveling less, not renting cars, purchasing gas, meals, airfare for corporate travel. Virtual conference attendance fees are much less than the past in person events. At my employer, profits are up even though sales are down in one business segment for this reason. Sales in another business unit are on track as the customers are essential workers, and profit is way over target.
That is true Carl, but it comes at a mental health price that we will have to pay someday.
That price is a lot lower than what I paid stuck in an office full of jabbering lackwits.
Especially in the ‘innovative open office concept’ pushed by the McKinzie-ites.
Our mental health systems and treatment have been hugely lacking for some time now. This will just add to that.
Everything you said is true, but need to mention despite having more discretionary income now spending still lower. For many people blowing extra $$s is on services (restaurants, movies, concerts, sports, etc.) rather than more goods from QVC.
I talked today to a guy in the flooring business. What a strange story he tells. New construction is booming, and lumber prices have doubled. People are flush with cash, and remodeling, too. He has a massive backlog, but is losing money because he can’t get goods. The flooring manufacturers are running half shifts, despite the huge backlog, because they can’t hire anyone. Unemployment benefits have been so high that no one will work. That may be changing, now, but it will take awhile for goods to reach him.
$600 is so high??? that is only 2400 a month. In nyc people pay that for rent not to mention food prices and utility costs Con Edison is most expensive in the country.
By the way I am glad these yuppie transplants are moving back to the Midwest because of the Suppossed crime wave in NY…
“$600 is so high??? that is only 2400 a month.”
…
Heh, this shows how out of touch you are. 30% of households have income < $35K. Furthermore, this is in addition to state benefits. In certain states (including NY) monthly benefit can be $4K or more.
That was $600 on top of the perhaps $250 that the state paid, so $850 a week, roughly the same as $21/hour. Apparently it must have been too much, as companies were unable to hire people for $12-15/hour jobs. I suppose we can import flooring from China?
Greatly depends on where you are. The big cities where close to 50% of the folks are unemployed service workers its bad. Also thanks to the Fed high housing costs have greatly hampered labor mobility.
600 is the federal part, you add 200-300 a week for the state (minimum) and that equates to 41,600-46,800 /year. for most workers making minimum wage to close to minimum, that is 2-3 times what they were making when they were working.
Same issue with cedar fencing apparently. I need a fence and the guy who usually does stuff around here goes into Home Depot every week and he cant get any treated cedar fence materials. America is running out of … trees??
I’m in a college town, we are remodeling condos for 1-2 ppl. They used to live in bigger units with more people but now smaller apartments are hot – you can guess why. Remodels now can pay-off within 5 years, less if you were in early.
Lumber prices have more than doubled Carl, did we not just talk about this the other day when I posted a thread about it? Wasn’t it you that said LUMBER IS ON FIRE?
That was funny. When I read it I was mad at myself for not thinking of it for a headline.
Lumber futures had a low in 2020 of 259.80 and a high of 850.30 per thousand board feet. That is 227.89% increase but you also have to allow that is not for a whole year so annualized according to trend it is really a lot higher. The spread between low on March 2 and the high on August 3 is only a five month period.
The way the CME group calculates it they take the end of year close on the last trading day of the last year and use that as the base this year for the percentage increase, so right this moment that is 95.75% increase in 2020 because the close on the last trading day of 2019 waas 442.02.
That is a great way if all you want to do is say what the annual increase is over the years, but it captures no volitility except over many years.
Seems like we have just lived through what would have been the next 10 years of deteriorating economic and socio-psychological conditions in 5 months.
Greenwald had an interesting talk today on “Is the US Social Fabric Unraveling?” He’s very perceptive, but as a prog his final takeaway is of course that we need socialism.
If we keep cramming more people into the country, socialism will inevitably happen. Freedom and population density are inversely proportional.
“Society stands at the crossroads, either transition to socialism or regression into barbarism” Rosa Luxemburg
And we very well may have socialism. Freedom was great while it lasted, but the US is on it’s last legs. The successor to a Democracy is always a dictatorship, of one form or another. It can me a Socialist dictatorship, or a military one, or one of the anarchist variety. Be thankful you were able to enjoy freedom while it lasted. We were very fortunate to be born at this particular point in history.
This isn’t PC but as long as you live in a White neighborhood or nice suburb like in the Metro West part of eastern Massachusetts you are well insulated from the ‘violence and crime’ in the diverse parts of cities like Boston or NYC
We live under a dictatorship now, the dictatorship of capitalism. Big capital makes all the major decisions in this country—-war, jobs, medical care, education, international relations—-who got the bail-outs from the Great Recession? Banks, financial institutions, monopoly corporations. Who has already gotten the bail-outs and guaranteed ahead of the coming Depression? All the same. And capitalist media—CNN, Fox, CBS, MSNBC, the NYTimes, have all made billions selling the faction fight between Trump and Democrats, all millionaires.
Whatever some people think “socialism” is, it’s not a bunch of rich people with minor differences acting like they really give two shits about working people—-white, black, men, women, old, young, or otherwise. Money protects money, and capitalism creates crises through a system of exploitation.
Thanks for the Greenwood video.
Thanks for posting the video. However, at no point does he say “we need socialism.”
He does not say the word “socialism” but his final analysis is that the structure of our system is depriving people of what they need to be happy. Translation: we need less “capitalism”, more social welfare programmes and a benevolent regulatory state. It helps to know that Greenwald was a Bernie supporter. His husband is a far-left politician in Brazil.
We already have socialism … but only for the wealthiest. “Privatize the gains … socialize the losses”
We need less crapitalism, crony capitalism. When lobbyist write the laws the general public is not be served properly.
The media and the 24/7/365 news ratings wars(think advertisers $$$) are a major component in the demise of civil discourse. I would also lump in social media platforms as helping to facilitate the miasmic political atmosphere we are enjoying today. Cheers!