drsohn.com +: Personal Income and Expenditure +...
drsohn.com <---graph
Personal Income & Spending:
martincapital.com
San Fran Fed's Forecast:
frbsf.org
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Rearranged.
>>> Personal Income and Expenditure
Released August 30, 2001
Covers July 2001
Forecast 0.3 %
Actual 0.5 %
Commentary:
Personal income increased 0.5 percent in July over levels shown in June. This follows a 0.4 percent increase in the month of June.
At the same time, personal consumption expenditures increased by 0.1 percent in July. The previous increase in June had been 0.6 percent.
The gain in personal income growth exceeds the average analyst expectation of a 0.3 percent increase.
In contrast, analysts had expected personal consumption to increase by 0.2 percent.
Month to month percent changes have a great deal of statistical noise in them, but the
chart above shows an important trend both in spending and income.
... Clearly, both personal income and personal consumption growth have cooled from the torrid pace of earlier in the year 2000.
... At the same time, they both remain strong and positive.
...This trend gives a strong signal for the future state of the economy.
With inventory levels reduced by the aggressive cost cutting of the first two quarters of
2001, companies will be able to count on sustainable production levels for the last half
of 2001.
... In fact, some sectors might need to step up production to deal with the consumption generated by the 38 billion dollar injection from the tax rebate.
... Others like the telecom equipment suppliers will have to wait for their recovery.
It will be important to watch the debate in Washington D.C. about the current budget.
Consumer are more likely to continue their enthusiastic spending if they believe the announced tax cuts really are permanent.
Hopefully, the political process of setting the budget will take into account the impact it has on consumer expectations.
Consumer confidence should not be considered an insignificant variable in the long-term health of the economy. |
