September 2015

August Personal Income up 0.3%; PCE on Track to Add 2.03 Percentage Points to GDP

0ther than the employment report and the GDP report itself, the monthly report on Personal Income and Outlays from the Bureau of Economic Analysis is probably the most important economic release we see monthly, as it gives us the monthly data on our personal consumption expenditures (PCE), which accounts for more than 2/3rds of GDP, and the PCE price index,

Jeb Bush: "Of course the rich will get richer..."

"That's just the way it is."

That's more or less how Jeb Bush defended his tax plan to Fox News Sunday after he was slammed for giving lopsided tax breaks to the wealthy. He told Chris Wallace: “The simple fact is 1 percent of people pay 40 percent of all the taxes. So of course, tax cuts for everybody is going to generate more for people that are paying a lot more. I mean that’s just the way it is.”

Q2 GDP Revised Even Higher to 3.9%

Q2 GDP has been revised upward again to 3.9%.  Originally Q2 GDP was reported as 2.3% and then increased to 3.7%.  The reason for the higher GDP revision is consumer spending was revised upward by over a quarter of a percentage point.  Consumer spending was 62% of real GDP.  The revision is yet another surprise since GDP is now 70% greater than the original estimate.

New Home Sales Pop Up by 5.7% in August

The August 2015 New Residential Single Family Home Sales increased by 5.7%.  Sales jumped up by 30,000 annualized units to 552,000 for the month.  July was significantly revised upward from 507 thousand to 532 thousand sales.  These are levels not seen since February 2008.  For the year, new single family home sales are up 21.6% from the year ago 454,000 sales levels.

Tax Cuts don't create Jobs and "Growth" doesn't raise Wages

We've been told that lower taxes and more "growth" equates to higher wages and more jobs (known as "trickle-down economics"). But since the depth of the Great Recession, even though stock prices and corporate profits are much higher, a lot more people are "not in the labor force" (and just aren't being counted in the official unemployment rate) — and wages are still down (not to mention, more people are also working part-time and temp jobs).

State Employment Shows Static Scene for August

The August state employment statistics shows the unemployment situation for states and regions is little changed from July.  From July 18 states lost jobs while 32 states gained them.  The national unemployment rate was 5.1% and 29 states showed an unemployment decrease while in 10 states the unemployment rate went up.

August Inflation -0.1% Due to Energy Prices

The Consumer Price Index decreased by -0.1% for August on energy price declines  Gasoline alone dropped -4.1% for the month.  Inflation without food or energy prices considered increased 0.1% for the month.  From a year ago overall CPI has increased 0.2%, which is very low, yet without energy and food considered, prices have increased 1.8%.