Professor Mark J. Perry's Blog for Economics and Finance
Real disposable income increased by 3.7% in April from the same month last year, according to a report today from the BEA (data here, see Table 10). This marks the fourth consecutive month of above average growth in real disposable income, and is the first period of above-average growth over a four month period since 2007 (see chart above).
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
8 Comments:
This sharp increase is simply caused by the stimulus plan and the tax cuts.
http://www.calculatedriskblog.com/2009/06/consumption-down-saving-rate-increases.html
Anonymous 1, you're partially right. If you look at the report, you'll also see that wages and salaries grew for the first time in eight months. That's a very positive development which adds to the ever-growing list of green shoots.
Throw in the disposable income data with the May ISM report showing new orders in positive territory (at 51.1, it's the highest it's been in 18 months) and the overall ISM at 42.8 (above the 41.2 level that signals overall expansion) and the question isn't, "Is the economy ever going to recover?" it's, "How strong is this recovery going to be?"
I think it's time we stop using the term "green shoots," by the way. I think we can now safely call them plants, or saplings, or some other term representing vegetation that's in an obvious growth state.
Anon - it doesn't matter WHY you pinhead - money is money to the folks
Green shoots or just early signs of inflation?
The ISM manufacturing index is calculated price times units. The index came in at 42.8, vs. the 42.3 consensus and compared to 40.1 in the prior period. Prices paid, however came in at 43.5, vs. the 35 consensus and compared to 32 in the prior period. That's a pretty huge price move.
The Fed has been printing money non-stop to outright buy everything from MBS to Treasuries to securities (although, this it does indirectly). All big companies are now understood to be too big to fail and more money will be printed for those continuing bailouts. Unless all this money is suddenly free, we haven't yet begun to feel the effects of this dizzying spending spree.
All this price propping, changes in accounting rules so that institutions can mark assets at well above market and the blocking of shorts is to create confidence where none should be. It's a con game, pure and simple. The Fed is running the largest pump and dump in history and when it crashes, 2008 will seem like a stroll in the park.
What you're seeing is not green shoots but green toxic slime being shot at you from the Fed.
"to securities" = "to equities"
looks like real disposable income is setting new records
like it is the highest it has ever been
Anon. 1:00,
Have to echo your concerns regarding inflation particularly given the deficit numbers and 9% growth of M2.
'Real Disposable Income Grows', eh?
This really is pretty funny especially when one considers the source of this alledged new wealth: The pattern of changes in income reflect, in part, the pattern of reduced personal current taxes and increased government social benefit payments associated with the American Recovery and Reinvestment Act of 2009...
Heck! Even the Chinese students aren't buying into the reasoning and are laughing at the salesman...
Post a Comment
<< Home