Incomes in the U.S. "unexpectedly" dropped

[marmar]

(Bloomberg) Consumer spending in the U.S. slowed in August as incomes unexpectedly dropped for the first time in almost two years, forcing households to use up savings.

Purchases rose 0.2 percent after a 0.7 percent increase the prior month, Commerce Department figures showed today in Washington. A 0.2 percent advance in prices wiped out the gain in so-called nominal, or unadjusted, spending. Incomes decreased 0.1 percent, the first decline since October 2009.

Little hiring, stagnant wages and a plunge in stocks have shaken confidence in the recovery that began two years ago, which may hurt sales at retailers like Best Buy Co. and Target Corp. The sputtering economy has prompted policy makers from President Barack Obama to the Federal Reserve to take additional action in a bid to prevent another recession.

“There’s not going to be health in consumer spending as long as the employment situation is weak,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “The combination of softness on the employment side coupled with a pretty steady increase in prices is causing people to dip into savings.” ...........(more)

The complete piece is at: http://www.bloomberg.com/news/2011-09-30/consumer-spending-in-u-s-slowed-in-august-as-incomes-unexpectedly-dropped.html

[OhioChick]

1. "Unexpectedly?"

You don't say. :eyes:

[Blue Owl]

4. Something tells me those Wall St. douchebags are pouring another toast

and having another laugh at this "unexpected" news...

[bullwinkle428]

2. I guess they're using the Condi Rice definition of the word "unexpectedly".

[dkf]

3. Is the rise in health care insurance costs reflected in this number?

Higher insurance premiums means less take home pay. If calculated like that I can definitely understand how income is decreasing.

[Selatius]

7. Somehow, I really doubt it.

Because if they included health care costs in any calculation, the number for the last ten years would be decidedly negative. Nobody except in the top 1% would regularly get the kind of pay raises that would keep up with something like 7, 8, or 9% inflation in health care premiums that has been the norm.

[dkf]

10. You are probably sadly correct.

Which makes these income numbers less relevant anyway.

[Aerows]

13. Income decreases when consumer spending is low

Because there is less overtime, salespeople get less commissions and hours get cut. That's why you have to have actual demand for the economy to improve.

[Thav]

15. I highly doubt they measure "take home pay"

Gross pay is easier to measure.

Even if they are measuring gross pay, a dip in that is worse news. Couple a drop in gross pay with rising paycheck deductions (insurance) and you have even LESS in the pockets of consumers.

[RaleighNCDUer]

16. No, massive unemployment is reflected in this number.

For example, I have a full time job. Until a year ago I also had a 15hr/wk P/T job, working at a movie theater. That job gave me spending money and let me see movies for free. The economy crashed, nobody had movie money, the theater closed, putting me (and 17 other people) out of work. My income dropped by $4,000/yr.

Multiply by 20 million.

[Autumn]

5. "unexpectedly"

:rofl: Bull Fucking Shit, things are going according to their plan.

[area51]

6. +1 n/t

[L0oniX]

8. LOL "unexpectedly" ...yea the rich didn't expect that!

[xchrom]

9. SURPRISE!

:eyes: these experts should be joining the unemployment lines.

[Bonhomme Richard]

11. I must live in an alternate universe. n/t

[Aerows]

12. When have "economists" ever expected anything?

If this was "unexpected", that just underscores how completely useless their "expertise" is.

Have they bothered to look at such obscure data as the unemployment rate, the housing market and consumer spending? I know that such information isn't readily available or anything, but gee whiz, it might help. So would leaving their offices and doing such things as visiting the grocery store, talking to people and opening a newspaper.

[formercia]

14. Just proves one thing

The Bean Counters have no fucking idea what's going on in the street.