Post by unlawflcombatnt on Aug 31, 2006 21:37:28 GMT -6
July 31st's Personal Income report again showed that Americans spent more than they earned. This month, disposable personal income increased $63.9 billion, while personal consumption expenditures increased $78.7 billion leaving a difference of -$14.8 billion. Even this is an understatement of the true gap, because personal income only increased $60.2 billion. This difference is accounted for by a decrease in taxes of $3.4 billion. Which simply means the government, funded by taxpayers, made up the gap by borrowing more money. Thus it seems more reasonable to say that personal consumption expenditures exceeded personal income by $18.5 billion ($78.7billion - $60.2 billion.) The government just paid for $3.4 billion of Americans personal consumption expenditures. Using the Bureau of Economic Analysis's own numbers for disposable personal income (i.e., $63.9 billion), the annualized decrease in the savings rate for July would be -$177 billion. Using the current months numbers for Disposable personal income and personal consumption spending, this converts to a -23% annualized savings rate for July. Adding back in the money "borrowed" from the government for July, and substituting total personal income for disposable personal income, the annualized savings rate would be -30%.
These numbers can be found in today's Personal Income & Outlays report from the BEA in the text on pages 1-2.
For each of the last several months, the government has downwardly revised the current -savings rate from its original prediction. (Savings rate defined as the Disposable Personal Income - Personal Consumption Expenditures.) They've also drastically reduced the -savings rate from previous months. It's difficult to determine what the source is for these downward revisions. Given that the actually downwardly revised the disposable personal income for 2 of the previous 3 months, without changing Personal Consumption expenditures for 2 of those months (and actually increasing them for May and the July estimate), there's no apparent explanation for "improved" numbers for the -savings rate. These dramatic revisions are shown by a copy of the current and previous "guesstimates" from Briefing.com below. The top chart is the latest version. The bottom chart is from the previous day's estimates and "pre-revision" numbers.
What a difference a day makes!
If anyone can figure out why the negative "savings" rate was revised and made less negative, let me know. It seems like pure hocus-pocus to me.
These numbers can be found in today's Personal Income & Outlays report from the BEA in the text on pages 1-2.
For each of the last several months, the government has downwardly revised the current -savings rate from its original prediction. (Savings rate defined as the Disposable Personal Income - Personal Consumption Expenditures.) They've also drastically reduced the -savings rate from previous months. It's difficult to determine what the source is for these downward revisions. Given that the actually downwardly revised the disposable personal income for 2 of the previous 3 months, without changing Personal Consumption expenditures for 2 of those months (and actually increasing them for May and the July estimate), there's no apparent explanation for "improved" numbers for the -savings rate. These dramatic revisions are shown by a copy of the current and previous "guesstimates" from Briefing.com below. The top chart is the latest version. The bottom chart is from the previous day's estimates and "pre-revision" numbers.
What a difference a day makes!
If anyone can figure out why the negative "savings" rate was revised and made less negative, let me know. It seems like pure hocus-pocus to me.