Dollars and Jens
Monday, October 30, 2006
The Personal Income report came out; the "savings rate", i.e. the extent to which consumption is less than current income, climbed to -0.2% of disposable income. ("Current income" includes, for example, dividends, but excludes capital gains, so I don't think there's much especially meaningful about the measured savings rate being negative.) Know what? Let's quote from the report:
Personal saving -- DPI less personal outlays -- was a negative $15.0 billion in September,Anyway, doesn't mean wealth is decreasing.
compared with a negative $49.0 billion in August. Personal saving as a percentage of disposable personal income was a negative 0.2 percent in September, compared with a negative 0.5 percent in August. Negative personal saving reflects personal outlays that exceed disposable personal income. Saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods.
Employee compensation increased a bit faster than 0.5%, but it's been a touch weaker than that lately, and is probably threading nicely between inflationary and stagnant.
The PCE was part of this report, and a couple hours later the Dallas fed released its own trimmed-mean PCE — its version of "core" — which slowed abruptly into the target range that the fed would be using if it were targetting inflation. Which, of course, it isn't. cough. One month of 1.7% annualized trimmed-mean PCE, of course, doesn't mean so much, especially the first time it's been below 2.7% since February.
While I'm babbling, I'll mention last week's GDP advanced estimate, which came in at 1.6%. Frankly, I kind of expected lower, and wouldn't be shocked if it were lowered at the end of November. Of some note is the fact that GDP ex--fixed-residential-investment... What? Don't roll your eyes at me. Seriously, that number came in at +2.7%, which wouldn't be a terribly weak number, and suggests that the housing slowdown hasn't affected the rest of the economy, or that, if it has, it's not so bad. (The number for the previous quarter was 3.3%; for the six months, GDP ex fixed residential investment may have been growing at "potential".)