The quarter ended on an upswing, as the data released yesterday showed. Personal spending rose 0.6 percent in March after rising 0.2 percent in February and 0.9 percent in January. The biggest jump was seen in services, up 0.7 percent, and durable goods, up 0.5 percent. Economists had expected spending to rise by 0.4 percent, according to a survey by Bloomberg News.
Personal incomes jumped 0.8 percent, with about half the increase, or $40.9 billion, coming from the federal government's new Medicare prescription drug plan; analysts had expected incomes to increase 0.4 percent. Wages, salaries and other forms of compensation increased by 0.5 percent.
Anyone see a problem here? If Americans have a saving rate of -.5% then what does that mean when we discuss "personal spending" rising .6%? Where is this money coming from? We've already determined that it isn't coming from earned income. Why are Americans spending more on services and durable goods?
Then we are struck by the next line stating that personal incomes rose .5% for those who are not "benefitting" from the government's Medicare prescription drug plan.
Sooooo let's do the math yah. The average American has a -.5% saving rate. The average american has had a .5% wage increase but has increased their spending by .6%. That means that the average American is still in the hole. How does that qualify for economic growth? Why isn't there any discussion of where the money for this "personal spending" is coming from and how it is going to be paid for (because the answer is that the spending is debt spending).
Now they must really think we are stupid if they want us to believe that the "economy" is growing. Growing for whom?
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