Statement from ESA Under Secretary Blank on June Personal Income
WASHINGTON—The Commerce Department’s Bureau of Economic Analysis today released personal income and outlays for June 2009. Nominal personal income fell 1.3 percent, real disposable personal decreased 1.8 percent, and real personal consumption expenditures declined 0.1 percent. From the fourth quarter of last year through the second quarter of this year, real disposable personal income rose 2.1 percent at an annual rate. Real consumer spending edged down 0.3 percent in the first two quarters after falling 3.3 percent during the previous two quarters.
“During the first half of this year, stimulus dollars boosted real disposable personal income, and real consumer spending stabilized after falling rapidly during the second half of last year. The GDP numbers last week indicated that we are making progress in bringing this recession to an end. In June, special one-time payments to individuals provided by the American Recovery and Reinvestment Act of 2009 decreased substantially, but other provisions continue to benefit households. Most forecasters expect that consumer spending and the overall economy will expand in the coming months,” ESA Under Secretary Rebecca Blank said.
Bloomberg: "Wages and salaries, which drive recoveries in spending, fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960."
The MTR-EM shows that overall real-wages started declining again. This gave a more clear picture of what is happing with the consumer since it does not consider any one-time stimulus dollars. It showed the trend in wages is down in part due to CPI (dollar dropping, food and fuel prices rising.) This can be seen as downward pressure on stocks if the trend continues. Typically we look for a 2-4% move in the model and then and impact on stocks a month or two out.