The Bureau of Economic Analysis (BEA) reports that Personal income decreased $159.8 billion, or 1.3 percent, and disposable personal income (DPI) decreased $143.8 billion, or 1.3 percent, in June. Personal consumption expenditures (PCE) increased $41.4 billion, or 0.4 percent. Now, let me get this straight. Income is down, but consumption is up. Oh, the consumer had to take on more debt. Read on.
Karl Denninger from the "Market Ticker" had this to say about the income numbers. "What's worse in the income and spending report is that "saving" (actually debt paydowns) has decreased; this is particularly troubling given the continuing over-leveraged state of the consumer. The last thing we need in our economy is yet more debt defaults driving even more economic contraction, but it appears that's exactly what we're going to get."
"Oh, and don't look at tax receipts either: they're down huge, with individual income tax receipts down some 22%! The last time we saw numbers like this was The Depression; you can claim that personal income is down "only" 2% if you'd like, but the last time I checked you only paid tax on income actually received, and while the tax system is progressive there is no way you can square a 2% "reported" income decline with a 22% decline in income tax receipts. Someone's lying and I'm quite confident that people aren't paying taxes on money they didn't earn!"
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