Earn less! Spend more!!

Once again, data coming out of the US look bleak. Admittedly, it's one month's data, but you have (nominal) July Personal Spending UP 0.2% MoM (survey +0.2%, prev month +0.6%) with Personal Income DOWN 0.7% MoM (survey -0.2%, prev month +0.1%)... and all this at a time when the PCE Deflator is crackling along at 4.5% annual pace (survey +4.5%, prev month +4.0%.)

Year on year, again in nominal terms, we have spending up 5.3% with income up 4.2%... applying the PCE Deflator to it, in real terms, Americans are STILL, even now, spending 0.8% MORE in real terms than the same period last year, while real income is DOWN 0.3%... and all this in the light of a growing number of home-owners hitting negative equity, not to mention market based wealth destruction.


(Consumer confidence, as measured by the U. of Michigan Confidence Index, also came in a bit higher than expected - corroborating evidence for the positive spending numbers.)

Seems to me that the stimulus checks and the decline from the oil price peak (about double the macro impact of the stimulus checks, by some reckoning) is buoying the US consumer... but this does not look sustainable beyond another datapoint or two, max - we're already hearing about cracks in retailspace as the stimulus checks all get spent.

And then after that... (whack!)

=================

And on the US GDP front, you had the 2Q coming in at 3.3%, ahead of expectations (2.7%) and way ahead of 1Q at 1.9%. Great...

... except that pretty much the sole driver was reported to be trade... so with the USD now UP from those heady (well, for Dollar bears anyway!) days (the USD index, DXY was down 4.5% from end Dec'07 to end 2Q08 alone, but is up 8.7% from the late April lows) AND the rest of the world now grinding slower, the prospects for US growth (and personal income) are not so hot for the rest of the year, IMHO.

So for those of you hoping for a continuing upswing in US growth, my advice to you is...

Stumble It!
::

::