Spending Up, Income Down
Okay, someone explain this one to me.
The Commerce Department put out a report that said spending in the U.S. went up .4% for the month of June, which is a good thing, I suppose, because it means people feel better about the economy overall. And yet, personal income dropped by 1.3% from the previous month, after going up the same amount in May. But because that bump was from governmental intervention of some sort, it actually comes out as a wash of sorts.
Not only that, but savings is down 4.6%, and unemployment is up another .7%, so where is all this consumer confidence coming from?
Well, I have a few ideas. One, we have Cash For Clunkers, which more than 300,000 people have taken advantage of, from what I hear, or at least put in for, and since that comes with government help, and it’s actually a program that WORKS (that’s for conservatives who don’t like it), that would help to stimulate spending.
Two, because of the government’s $8,000 tax rebate program for housing, that’s helped stimulate spending on new or existing homes, which is also a good thing.
And three, it’s summer, which means cookouts and parties and boating and vacations, and people are more willing to spend money that makes them happy as long as they get to play with others, rather than spending money to please themselves while they’re sitting at home trying to figure out how to pay bills.
In other words, this is kind of a seasonal bump, one that probably won’t sustain itself once schools start in September, because we’re coming upon school clothes and supply season, and folks with kids must take care of them.
The worrisome part to me is that unemployment continues moving up, we’re now worried what the potential commercial real estate market might do to jobs, and there don’t seem to be many new jobs being created around the country. There are some, but nothing at the level of what this country needs.
And then there’s health care,… no, let’s not go there for now.