Ticker breaks down the personal income report.
Private wage and salary disbursements increased $3.3 billion in September, compared with an increase of $23.6 billion in August. Goods-producing industries' payrolls decreased $1.6 billion, in contrast to an increase of $6.7 billion; manufacturing payrolls decreased $1.0 billion, in contrast to an increase of $2.3 billion. Services-producing industries' payrolls increased $5.0 billion, compared with an increase of $16.8 billion. Government wage and salary disbursements decreased $4.8 billion, compared with a decrease of $8.2 billion.
So. Notice that while there is growth, it's anemic compared to August--and the August growth didn't have a measurable effect on unemployment.
In fact, the top-line unemployment numbers are going to look better for a while, because the unemployed are now rolling off the 99-week extended benefits period.
One more observation:
Personal income receipts on assets (personal interest income plus personal dividend income) decreased $5.7 billion, compared with a decrease of $10.7 billion.
What "interest income"? Banks are now paying ~1% or less (and collecting ~2.5% on T-Bonds, mind you.)
Another example of why an extended period of lackluster growth and severely high unemployment is dangerous. Sub 3% growth, coupled with mass unemployment and undercapacity utilitization, doesn't generate enough momentum to produce the 150,000+ jobs/month increase necessary to keep the unemployment rate stabile. Of course, this slack in the economy suppresses real wage growth and, eventually, leads to no GDP growth or worse as unemployment inches up again and real wage growth falls back.
ReplyDeleteSomething has to give at these anemic growth levels. And it will eventually.
P.S. these personal income numbers tell you one other thing. The prospects of high inflation over the next few years are almost nill.
The prospects of high inflation over the next few years are almost nill
ReplyDeleteNot necessarily. IIRC, there was lots of inflation during Carter and during early Nixon. In the case of Carter, there was also a lot of unemployment (remember the 'misery index'?)
Prices can and will rise regardless of incomes.
That's Obama's greatest fear.
True. Inflation expectations MAY rise in the future. But they're well grounded right now.
ReplyDeleteAnd it can't be understated enough the role that oil supply shocks coupled with the Nixon administration's wreckless use of the printing press in the early 1970's played in the stagflation episode of the late 70's. We live in different times.
(Quick disclaimer: the use of the printing press now compared to the use of the printing press during times of 4-5% unemployment and solid growth (like the early 70's) isn't the same thing. Just thought I'd throw that out there because I know what's coming.)