Friday, April 29, 2011

Real Consumer Spending 1.7% Above Dec. 2007

The BEA released its report today on "Personal Income and Outlays" for March, here are some highlights:

1. Real personal consumption spending in March set a new monthly record of $9.5 trillion (2005 dollars) in March, which is 1.7% and $156 billion above the pre-recession peak of $9.355 trillion in December 2007.   

2. Both real disposable personal income and real personal consumer spending increased by 2.7% in March from a year earlier.  

3. Annual inflation for Personal Consumption Expenditures (PCE) was 1.8% in March, and only 0.9% for the PCE excluding food and energy.  

4. The personal savings rate in March held steady at 5.5%, the same as February, and down slightly from 5.9% in January. 

37 Comments:

At 4/29/2011 8:52 AM, Blogger juandos said...

Something about this reporting just doesn't seem to jive with the realities of today...

I'm NOT saying its wrong but I can't help but think that the spending went up because of price rises which are in part driven up due to the costs of energy...

 
At 4/29/2011 8:58 AM, Blogger morganovich said...

so, real personal spending is now above it's pre recession peak, but real personal income has not even made up half of it's decline.

http://cr4re.com/charts/charts.html?GDP#category=GDP&chart=PersonalIncomelessTransferMar2011.jpg

it sounds to me like we are living beyond our means here.

PCE growth consistently exceeding that of PCI seems unsustainable to me.

further, dig into that number.

"PCE price index -- The price index for PCE increased 0.4 percent in March, the same increase as in February."

that's a 5% annualized inflation rate.

the inflation apologists are going to have a more and more difficult time claiming we are in a low inflation/deflationary environment as even the heavily massaged federal figures are starting to show the inflation.

 
At 4/29/2011 9:07 AM, Blogger Mark J. Perry said...

Note: Real disposable personal income is more than 4% above the Dec. 2007 level.

 
At 4/29/2011 9:22 AM, Blogger juandos said...

Hmmm, I wonder where the St. Louis Fed is getting its info from...

It seems to me that Reuters is painting a different picture for what that's worth...

 
At 4/29/2011 10:18 AM, Blogger Rufus II said...

Per the link:

Non-durable goods Spending (read: mostly gasoline) up about 3 times the spending on Durable goods. And, that money was, mostly, sent overseas.

 
At 4/29/2011 11:05 AM, Blogger morganovich said...

This comment has been removed by the author.

 
At 4/29/2011 11:13 AM, Blogger morganovich said...

these numbers don't seem like they add up.

how can PCE be up above 2008 while PCI has only recovered about half way while at the same time, the savings rate is up and DPI is nearly to pre recession highs and savings as a % of DPI remains up (though not high)?

(PCI is still 3% off the 2008 peak whereas PCE is 2-3% above it) that is a huge gap, especially when savings rates went up over that period.

i suspect that answer is that PCI is measured "less transfer payments". it is the federal debt funded transfer payments that are closing this gap and driving spending and DPI (measured including transfers).

i would not call that particularly sustainable. in fact, it is the road to ruin.

i think you are falling into the Keynesian trap of believing that all spending is good dr perry.

this is not so if you cannot afford it. these chickens will come home to roost. our federal debt and unfunded liabilities are going to hurt future growth.

politicians will always try to convince you to cure a hangover with cocaine, and it may even make you feel better for a while (hopefully until they are out of office) but when the come down finally does arrive, it's going to be MUCH worse as a result.

 
At 4/29/2011 11:16 AM, Blogger VangelV said...

There you go again. You use the word real without doing some basic fact checking. When the inflation and GDP deflator numbers are made up the reported REAL GDP, spending, etc., are meaningless.

 
At 4/29/2011 12:46 PM, Blogger morganovich said...

i'm with vangel on this:

Annual inflation for Personal Consumption Expenditures (PCE) was 1.8% in March, and only 0.9% for the PCE excluding food and energy.

these numbers are only about half of last 12 month inflation figure from BPP. even the figures from q1 GDP are much higher.

personal consumption price index from yesterdays GDP number was up at 3.8%

use that as your deflator on the income series, and you get a real decline.

 
At 4/29/2011 3:42 PM, Blogger Ron H. said...

"Non-durable goods Spending (read: mostly gasoline) up about 3 times the spending on Durable goods. And, that money was, mostly, sent overseas."

And yet, you want to tax XOM - and presumably other oil companies - even more on domestic production, so that what IS produced domestically, will cost even more, and encourage even more buying from overseas.

You are complaining about both sides of the equation. What do believe is the real problem? you can't have it both ways.

 
At 4/29/2011 6:39 PM, Blogger Rufus II said...

The real problem is "our leaders are thieves, and idiots."

They came within a whisker of allowing the worst financial Disaster in the history of the planet with hundreds of smart people telling them every day that they were taking us on a course to catastrophe with Hundreds of Billions in Liar loans, and ARMs that weren't being understood by the buyers on top of Drunken Gambling with Trillions of Dollars of Derivatives, fraudulently rated by other crooks, and sold criminally to anyone naive enough to waste their, and their clients money on same.

All the while, they've been ignoring the smart people that have been telling them for years that oil supplies are in the process of topping out, and that a different course has to be set.

They have listened to the lies of the Exxons of the world, as they promised future production of 130 Million, 140 Million, and unlimited millions of oil just waiting to be tapped.

They have sent us into Overseas Wars costing, eventually, Trillions of Dollars to "Protect" the Oil Flow when 1/10th of that amount could have, essentially, set up the infrastructure for enough biofuel production to wean us off Foreign Petroleum for good.

If you think I'm Mad, you're right. I'm madder than an old wet hen. They have led us, blindly, to the abyss of destruction through their greed, avarice, and all around malfeasance, and I'm Pissed.

Now, they blabber on about how I'm supposed to be overjoyed that they paid 90% Royalty to Venezela, or some such, and that, somehow, that is supposed to help me pay all the bills for the Wars to protect their Fortunes. Bah.

 
At 4/30/2011 1:23 AM, Blogger Ron H. said...

"...when 1/10th of that amount could have, essentially, set up the infrastructure for enough biofuel production to wean us off Foreign Petroleum for good."

Do you have references for this?

 
At 4/30/2011 1:28 AM, Blogger Ron H. said...

Rufus

You didn't explain how you reconcile your desire to tax oil companies more heavily with your desire for more domestically produced, and presumably cheaper, gas.

 
At 4/30/2011 7:23 AM, Blogger VangelV said...

They have listened to the lies of the Exxons of the world, as they promised future production of 130 Million, 140 Million, and unlimited millions of oil just waiting to be tapped.

Wrong. The predictions came from the the EIA and IEA and were based on estimates provided by national oil companies. And if you have been paying attention, some within the IEA have been complaining about the political pressure being put by the US government, which wanted higher estimates.

They have sent us into Overseas Wars costing, eventually, Trillions of Dollars to "Protect" the Oil Flow when 1/10th of that amount could have, essentially, set up the infrastructure for enough biofuel production to wean us off Foreign Petroleum for good.

The wars were stupid but biofuels are just as stupid. We have already seen the very negative effect of ethanol subsidies, which have cost the taxpayers billions, while driving both food prices and energy prices higher.

If you think I'm Mad, you're right. I'm madder than an old wet hen.

You certainly seem to be a nutcase if you really believe some of the things that you write. I believe that you are right about the idiocy of politicians but totally wrong about solutions. You don't fix decisions made by lousy politicians by providing other politicians with more power.

They have led us, blindly, to the abyss of destruction through their greed, avarice, and all around malfeasance, and I'm Pissed.

Because you are mad I do not know who exactly 'they' are. Who do you know in this world who isn't 'greedy?' Where are these angels that you would have us ruled by? And if you can't find them why the hell do you promote top down decision making?

 
At 4/30/2011 7:24 AM, Blogger VangelV said...

"...when 1/10th of that amount could have, essentially, set up the infrastructure for enough biofuel production to wean us off Foreign Petroleum for good."

Do you have references for this?


Of course not. He is crazy and makes up things to suit his views.

 
At 4/30/2011 7:25 AM, Blogger VangelV said...

You didn't explain how you reconcile your desire to tax oil companies more heavily with your desire for more domestically produced, and presumably cheaper, gas.

Good luck on getting a coherent answer.

 
At 4/30/2011 9:35 AM, Blogger morganovich said...

rufus-


that's quite a rant.

i'm afraid you have really jumped the rails now into populist nonsense and class war.

do you have any evidence at all for anything that you have claimed?

your understanding of these issue seems to be based on the hysterical rantings of left-wing blogs and based upon a notion of "evil companies" that "owe" you things.

i notice that you have yet to provide a single piece of hard data for your exxon taxation claims, just repeated unsubstantiated ravings. i suspect that the rest of your arguments will similarly lack any actual factual support.

if you want to be a credulous populist wing nut, well, that's up to you. but if you want to be taken seriously, you're going to need to come up with some data.

i shudder to even consider what you mean by "fair share". that's usually code for "you have and i want". what's a fair share?

if you do business in nigeria, explore there, drill there, pump there, transport there, why is some "fair share" of that due to the US?

what is it you think taxes are for?

what is it they owe to the US for doing this?

further, you are pretending that the boatload of other taxes levied by the US somehow don't matter.

would you feel under-taxed if i cut your income tax in half but then levied a "rufus tax" of 40% of your income?

your position seems ludicrously myopic to the point that you are missing the issue. taxes are taxes. oil companies pay a whole raft of them the NO ONE ELSE DOES. there's no "per burger" tax or "per t-shirt tax". those taxes are both nastier than income tax (as they come off the top not the bottom) and are at a much higher rate than income tax.

your augment is the equivalent of saying, "well, i hardly punched you in the face at all so you are unpunched despite the 20 times i hit you in the kidneys."

wake up and smell what you are shoveling rufus. it's just unsubstantiated populist nonsense inflamed by class envy.

 
At 4/30/2011 9:38 AM, Blogger morganovich said...

PS-

can you show me any company in the world that pays more taxes than exxon?

seriously, try it.

i'll bet you can't.

and you still have not told us what you think ought to be done.

"they should pay their fair share" is the sort of meaningless phrase trotted out to inflame the masses during political debates. but it means nothing. it's just a flimsy, abstract idea.

so, in concrete terms, what do you think ought to be done?

what's a "fair share" and how would you get to it?

 
At 4/30/2011 10:49 AM, Blogger Rufus II said...

I was very specific. Taxes should be "Collected" when "Owed." Right now they can keep their profits overseas Forever w/o ever bringing them back to the U.S. and paying taxes on them. Same with Microsoft, Apple, and all the rest of the larger companies.

You can build an ethanol plant, during normal times, for about $1.50 per annual gallon produced (about $150 Million for a plant that produces 100 Million gallons/yr.

You want 100 Billion Gallons/yr? Bring $150 Billion.

You do the math.

The reason I said, "during normal times" is: There was a huge rush in 2007 when they were trying to get over a hundred plants built, right now, that prices got up into the $2.00/annual gallon range; but that was a pretty abnormal situation.

 
At 4/30/2011 12:25 PM, Blogger juandos said...

Oh dear! We have one of those looney 'blood for oil' folks here: "They have sent us into Overseas Wars costing, eventually, Trillions of Dollars to "Protect" the Oil Flow when 1/10th of that amount could have, essentially, set up the infrastructure for enough biofuel production to wean us off Foreign Petroleum for good"....

Really? I mean really? The Exxons of the world can do that all on their own?

Or maybe you're talking about crony capitalism?

 
At 4/30/2011 1:12 PM, Blogger Ron H. said...

Rufus

"I was very specific. Taxes should be "Collected" when "Owed." "

OK! Problem solved. Taxes ARE "collected" when "owed". Now what's left?

Is the concept of "owed" causing you trouble?

"Right now they can keep their profits overseas Forever w/o ever bringing them back to the U.S. and paying taxes on them. Same with Microsoft, Apple, and all the rest of the larger companies."

You must have skipped over the careful explanation morganovich provided for you that asked why you thought that somehow US tax was "owed" on something that occurrs entirely outside the US. "Back to the US" doesn't apply.

Perhaps you should direct your anger at those who write tax code, instead of at companies that must spend enormous sums complying with those thousands of pages of codes.

"You can build an ethanol plant, during normal times, for about $1.50 per annual gallon produced (about $150 Million for a plant that produces 100 Million gallons/yr."

No argument there, but what happens after that? Will the operation of this plant make economic sense?

"You want 100 Billion Gallons/yr? Bring $150 Billion.

You do the math.
"

But I want 10 trillion gallons. Is there no limit to scaling?

How about YOU doing the math. What would be required to produce that 100 bln gallons/yr beyond just building a plant?

Is there enough biomass available to produce that volume? How much land would be required to produce that much biomass?

You're aware, I'm sure, that if every ear of corn now grown in the US was used to make ethanol, at most, 20% of current gasoline usage could be replaced.

I assume, based on your earlier comments, that you are dead set against "sending money overseas" to import fuel, or inputs to fuel production, so all biomass must be grown domestically.

I again assume that you're aware that ethanol isn't a new fuel, and has been available as long as there have been internal combustion engines, and that some early cars were 'flex fuel", and could run on ethanol, as well as gasoline.

The market chose gasoline as the cheapest, best fuel, and nothing has changed since. If ethonal were the better, cheaper fuel in the quantities required, it would already be the fuel used today.

Are you aware that even ALGORE now admits that ethanol may not be such a good idea? Ethanol is a political play, not an economic one.

You might want to think these things through before you post silly comments like this.

 
At 4/30/2011 2:48 PM, Blogger Rufus II said...

Trust me, the last thing in the world I'm concerned with is "what Al Gore might, or might not, say."

Your numbers on corn are wrong, but it doesn't matter. The DOE says we have, at least, 100 Million Tons of waste biomass (ag, forestry, etc) that could be directed to ethanol. That would yield around 80 Billion Gallons. Add that to the 14 Billion Gallons that we're already getting from Corn, and you're, basically, home.

We, also, have about 30 Million Acres in the CRP that we're paying farmers Not to Farm. That could contribute another 25, or so, Billion gpy.

Of course, we don't need all that. We will be producing oil, and gas in this country for many, many years, and cars are becoming more fuel efficient.

The last I looked (yesterday) Wholesale ethanol (before blending subsidies) front month contract was selling for $2.65 gal on the CBOT. Gasoline front month was $3.40.

 
At 4/30/2011 4:27 PM, Blogger juandos said...

"The last I looked (yesterday) Wholesale ethanol (before blending subsidies) front month contract was selling for $2.65 gal on the CBOT. Gasoline front month was $3.40"...

Well its painfully obvious rufus still hasn't figured it out...

That so called contract price is in large part driven by inane federal laws that mandate some of the food resources into the gas tank...

 
At 4/30/2011 4:54 PM, Blogger Rufus II said...

No, Juandos, the painfully obvious thing is that even with very high corn prices (caused by a disastrous crop last year in China, and a very poor crop in the U.S.) Ethanol is still $0.75/gal cheaper than gasoline, and, with a decent harvest this year we could, very likely, be looking at a thread of $3.65 to $1.65.

In other words, Wholesale Ethanol could, quite likely, be selling (before subsidies are added) for less than Half the Price of Gasoline.

And, that's not even considering what gasoline might be selling for if we removed the, almost, Two Million barrels/day of ethanol from the Global liquid fuel market.

 
At 4/30/2011 6:08 PM, Blogger Ron H. said...

Rufus

Your numbers don't compare to anything in the real world. You are using optimistic guesses by those who have a lot to gain - read rent seekers looking for grants and subsidies - and not proven historical reality.

I would love to read your references for this ethanol nirvana. Can you provide links? Everything I can find tells a very different story.

Your suggestions seem so naively simple. Thirty million acres in the CRP will produce 850 gal/acre? Nearly twice the cuurent best yield of 450 gal/acre. That's impressive! Have you even wondered how much of this acreage is viable for ethanol production? Surely you realize that farmers have set aside their least desirable land for CRP.

But, there's no need to speculate on any of that, because your idea would never get past those other green groups, the conservationists. Check with the Sierra club for their position on this.

You fail to mention that ethanol from waste biomass is a dream for the future, as no meaningful amount of production is currently in place, and there are no realistic ideas on scaling to a meaningful level.

You once again have trouble with numbers, as you project 800 gal/ton, when the most optimistic number from anyone else is 100 gal per ton, by the year 2030.

You either have trouble understanding what you think you know about ethanol, or you are intentionally lying.

You still haven't answered my questions from previous comments, so I can assume you don't have any good answers. If I push you too hard on this ethanol subject, will you change the subject again?

 
At 4/30/2011 6:27 PM, Blogger Rufus II said...

Well, I typed "DOE Billion Ton Biomass" into Bing, and the first hit was this:

DOE/USDA Study

They figure 1.3 Billion Tons Annually Available.

You have no idea what you're talking about. Look up "Inbicon," (they are, currently, producing Cellulosic Ethanol using Novozymes Enzyme technology.)

Also, Genera; they are a partnership between Dupont, Danisco, and the Univ. of Tn, at Vonore, Tn.

Look up: Poet - Project Liberty, and Abengoa - Hugoton, Ks.

Depending on the feedstock, 80 gal/ton is looking fairly reasonable. A very important co-product, of course, is electricity generation from the remaining lignin. Approx 1 MW continuos capacity per 1 million gal/yr ethanol production.

Poet, the premier company in ethanol production at this time with 26 biorefineries operating, profitably, is looking to be able to profitably sell ethanol from corn stover at a price around $2.00 - $2.25 gal.

 
At 4/30/2011 6:31 PM, Blogger Rufus II said...

You're not in Kansas any more, Chilluns.

It's the 21st Century, and Biology is ascendant.

 
At 4/30/2011 7:11 PM, Blogger juandos said...

"Ethanol is still $0.75/gal cheaper than gasoline, and, with a decent harvest this year we could, very likely, be looking at a thread of $3.65 to $1.65"...

Regarding the price of gasoline did you figure in the price the taxes paid by the producers of gasoline and the costs imposed on the manufacture of gasoline by various federal agencies?

Ethanol is getting a helping hand: First, the feds have since 2005 required the use of ethanol in gasoline — 12 billion gallons of the stuff this year, rising to as much as 36 billion by 2022.

Then, ethanol gets a 45-cents-per-gallon subsidy when blended into gasoline.

And then, to protect the domestic ethanol market, the government slaps a 54-cents-a-gallon tariff on imported ethanol
...

 
At 4/30/2011 7:39 PM, Blogger Rufus II said...

Of course, Juando, Exxon owns oil fields, not corn fields. There is no way the oil companies would blend ethanol if they weren't forced to. (and, would you care to speculate on what the price of gasoline would be, then?)

As for the $045/gal tax credit: that goes to the "Blender" (read: oil company.) Kind of a sop to their hurt feelings. It used to be $0.51, was cut to $0.45, and will probably be cut again, if not eliminated, completely, in the next energy bill.

As for the tariff: ALL ethanol qualifies for the $0.45/gal Tax Credit. As a result the tariff was passed to eliminate having foreign ethanol producers being subsidized to compete against domesticate oil producers.

In a perverse turn of events, "Non-Subsidized" U.S. Ethanol is being Exported to Brazil due to the high price, and shortage, of Brazilian sugarcane ethanol.

But, while we're on the subject of "Subsidies," when do we get around to talking about our expenses in the Persian Gulf, and Two Wars in Iraq?

Up around a $Trillion, now, aren't we?

 
At 4/30/2011 8:26 PM, Blogger Ron H. said...

"Well, I typed "DOE Billion Ton Biomass" into Bing, and the first hit was this:

DOE/USDA Study
"

So, your previous assertions are based on...What? You had no basis for your nonsense claims, so you just now started looking for some support?

DOE/USDA study:

Do you see the word "feasibility" in the title? What does that word mean to you? Did you even read the report you are using as support. I think not, or you would realize what lame support it really is. It's a wish list for the future.

The report was written in 2005. What's the current state of these projections after 6 years?

from Poet:

"As we look to the future of renewable energy, we look to the world's most abundant organic compound -- cellulose."

and:

"We plan to have 3.5 billion gallons of annual capacity by 2022, making use of various cellulosic feedstocks from across the country." (that's a 9 day supply)

You need to do better than this.

Where are your answers to my previous questions? It's OK to admit you're wrong, and that you don't have any.

It's also OK to admit that:

1. Without government mandates and subsidies, ethanol wouldn't be considered as a motor fuel.

2. All talk of meaningful cellulosic ethanol production is in future tense.

3. There are serious obstacles to scaling up ethanol production to a meaningful level any time in the forseeable future.

Keep in mind that what you call "waste biomass" is mostly now used in other productive ways. It isn't just waiting for someone clever to find a use for it. Future ethanol producers will have to bid against current users of waste biomass.

 
At 4/30/2011 8:40 PM, Blogger juandos said...

rufus makes the claim: "Of course, Juando, Exxon owns oil fields, not corn fields"...

Not normally, they lease fields...

"There is no way the oil companies would blend ethanol if they weren't forced to"...

See what I mean by federal government interference in the market place?

I wouldn't put that crap in my car either if I had the choice...

"and, would you care to speculate on what the price of gasoline would be, then?"...

With or without the federal government extorting money from the oil companies at every turn?

"As for the $045/gal tax credit: that goes to the "Blender" (read: oil company.) "...

Per your usual style rufus you're wrong again...

"As for the tariff: ALL ethanol qualifies for the $0.45/gal Tax Credit. As a result the tariff was passed to eliminate having foreign ethanol producers being subsidized to compete against domesticate oil producers"...

LMAO!

The fact you can't seem to grasp rufus is that without government interference ethanol wouldn't have a market for the most part...

Corn ethanol's downsides: High food prices, more pollution

 
At 4/30/2011 9:57 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 4/30/2011 10:04 PM, Blogger Ron H. said...

Rufus

"You have no idea what you're talking about. Look up "Inbicon," (they are, currently, producing Cellulosic Ethanol using Novozymes Enzyme technology.)"

This example is even sillier. You seem to have no sense of scale. This plant you hold up as the epitome of state of the art, real world scale cellulosic ethanol production, produces 1.4 mil gals/yr, a four hour supply of fuel for US motorists.

This plant cost in the neighborhood of $100 million to build, and produces 1.4 mln gal/yr. Where's your example of $150 mln for 100 mln gal/yr?

Can you understand why you are being laughed at?

"Depending on the feedstock, 80 gal/ton is looking fairly reasonable."

Say, isn't this an order of magnitude smaller than the 800 gal/ton you claimed earlier?

Your ignorance is overwhelming. Come back when you have something meaningful to discuss, and don't waste people's time until then.

 
At 5/01/2011 1:36 AM, Blogger Rufus II said...

Whatever you say, Ron, and j.

I was right 5 years ago, when I was posting on Kudlow's blog about what was coming with corn ethanol, and I'm right now.

People like you were insulting me then, and they have been proven wrong. You are being proven wrong as we type.

you are, hysterically, defending what you want to believe. I'm telling you what is happening.

We are looking at the imminent beginning of the decline in oil flow, and there is only one substance available to us to mitigate the decline.

The Inbicon plant was expensive because it's a prototype, and a research facility. It, also, is an Electric plant. Construction will start on the larger plants this summer, and by 2015 I expect there will be between 25 and 50. By 2020 possibly 4 or 500.

 
At 5/01/2011 3:02 AM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 5/01/2011 3:07 AM, Blogger Ron H. said...

"Whatever you say, Ron, and j."

I take it then, that you admit you have no good answers, and no explanation for the wild inaccuracies, not to mention sudden changes, of your numbers?

5/01/2011 3:02 AM

 
At 5/01/2011 3:20 AM, Blogger Rufus II said...

I think you quit reading. :)

 

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