Employment Costs, GDP, Deflator, Mich Sentiment
In our top story tonight, the leader of al-Qaida in Iraq, Abu Musab al-Zarqawi, is STILL dead and someone else has taken his place.
July University of Wolverine (Michigan) Consumer Sentiment DOWN @ 84.7 vs prior 84.9. Yawn.
Q2 GDP @ 2.5% vs prior 5.6%; GDP Price Deflator +3.3% vs prior +3.1% Full Report
Inside the number: Contributing to the slowing: "downturns in PCE for durable goods and in equipment and software, decelerations in exports and in PCE for nondurable goods, a downturn in federal government spending."
"A larger decrease in residential fixed investment that were partly offset by a deceleration in imports, an acceleration in PCE for services, and an upturn in private inventory investment."
Final sales +2.1% annualized vs prior 5.6%. Domestic final purchases +1.6%, vs prior 5.4%. Federal spending -3.4% vs prior +8.8%, Defense spending -1% vs prior +8.9% . State and local government spending +3% vs prior +2.7%.
A major revision to 03-05 showed that GDP is averaging 3.5% growth over the last 4 quarters and Real GDP averaged 3.2% in the last three years.
However, exports & imports had a major contraction in Q2, reading between the lines, this is bad news regarding and for China.
GDP price deflator index +3.3% for the 3rd straight quarter. Consumer prices including food and energy +4.1% vs prior 2.7%. Core PCE +2.9% annualized, the fastest in 12 years. Consumer prices YOY + 2.3%, the fastest growth since 1995.
Employment Costs: +0.9% vs prior +0.6% Full Report
Inside the number: Inflation adjusted annual compensation was revised down to +2.3% between 2003 and the end of 2005, the slowest in any post World War II recovery. Benefits grew at an inflation adjusted 4.9% annual rate rather than the 6.0% originally reported.
GDP adjustments 2003-2005: Full Report
Real dividend income +12.1% annual, Real nonfarm proprietors' income +5.2% annual. DPI - Disposable personal income and compensation DOWN.
A large upward revision to corporate profits before tax was more than offset by a large downward revision to the capital consumption adjustment.
From Table 11-B: % increase from prior year in corporate profit after tax 02 +14.3%; 03 +15.5%; 04 +27%; 05 +32.6% i.e. Corporations made record profits and invested less.
Summary: As the housing ATM spigot gets shut off, disposable income is down and cash strapped consumers are pulling back. Uncle Sam can't make up the difference, but state and local governments are trying.
The economy is still growing due to gulf rebuilding and the Iraqi war. Prices and inflation are smoking hot and will continue to rise due to energy cost passthrough.
Compensation is down, benefits are shrinking and taxes are up. Even as their input costs rise, corporations are recording record profits. Big money and capital assets are gaining while labor wages are not.
The incomes of the vast majority who labor to earn their livelihoods have been stagnant while those who let their money work for them have prospered. The chasm between the haves and have nots continues to grow at epic proportions.
July University of Wolverine (Michigan) Consumer Sentiment DOWN @ 84.7 vs prior 84.9. Yawn.
Q2 GDP @ 2.5% vs prior 5.6%; GDP Price Deflator +3.3% vs prior +3.1% Full Report
Inside the number: Contributing to the slowing: "downturns in PCE for durable goods and in equipment and software, decelerations in exports and in PCE for nondurable goods, a downturn in federal government spending."
"A larger decrease in residential fixed investment that were partly offset by a deceleration in imports, an acceleration in PCE for services, and an upturn in private inventory investment."
Final sales +2.1% annualized vs prior 5.6%. Domestic final purchases +1.6%, vs prior 5.4%. Federal spending -3.4% vs prior +8.8%, Defense spending -1% vs prior +8.9% . State and local government spending +3% vs prior +2.7%.
A major revision to 03-05 showed that GDP is averaging 3.5% growth over the last 4 quarters and Real GDP averaged 3.2% in the last three years.
However, exports & imports had a major contraction in Q2, reading between the lines, this is bad news regarding and for China.
GDP price deflator index +3.3% for the 3rd straight quarter. Consumer prices including food and energy +4.1% vs prior 2.7%. Core PCE +2.9% annualized, the fastest in 12 years. Consumer prices YOY + 2.3%, the fastest growth since 1995.
Employment Costs: +0.9% vs prior +0.6% Full Report
Inside the number: Inflation adjusted annual compensation was revised down to +2.3% between 2003 and the end of 2005, the slowest in any post World War II recovery. Benefits grew at an inflation adjusted 4.9% annual rate rather than the 6.0% originally reported.
GDP adjustments 2003-2005: Full Report
Real dividend income +12.1% annual, Real nonfarm proprietors' income +5.2% annual. DPI - Disposable personal income and compensation DOWN.
A large upward revision to corporate profits before tax was more than offset by a large downward revision to the capital consumption adjustment.
From Table 11-B: % increase from prior year in corporate profit after tax 02 +14.3%; 03 +15.5%; 04 +27%; 05 +32.6% i.e. Corporations made record profits and invested less.
Summary: As the housing ATM spigot gets shut off, disposable income is down and cash strapped consumers are pulling back. Uncle Sam can't make up the difference, but state and local governments are trying.
The economy is still growing due to gulf rebuilding and the Iraqi war. Prices and inflation are smoking hot and will continue to rise due to energy cost passthrough.
Compensation is down, benefits are shrinking and taxes are up. Even as their input costs rise, corporations are recording record profits. Big money and capital assets are gaining while labor wages are not.
The incomes of the vast majority who labor to earn their livelihoods have been stagnant while those who let their money work for them have prospered. The chasm between the haves and have nots continues to grow at epic proportions.
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