TrimTabs Disputes Income, Savings Stats

In their latest weekly report, TrimTabs Investment Research reports on their analysis that concludes the BEA (Bureau of Economic Analysis) is overstating personal income and savings rates.

Before the conspiracy theorists say AHA!, Trim Tabs shows how the BEA process has a long-time bias that under-reports income gains during expansions and over-reports gains during contractions.

TrimTabs says that the savings rate, which is based on the estimated personal income level, is therefore overstated. Instead of 6.9% (BEA), they say it is actually 2.8%. Furthermore, if the effect of the stimulus payments in May is subtracted, they say the savings rate would be reduced to 0.9%.

TrimTabs uses an analysis process for personal income which tracks income tax receipts. This process produces a personal income loss in May of 3.6%, compared to the BEA gain of 0.3%. The corresponding numbers for wages and salaries: TrimTabs, -4.8% and BEA, -1.1%.

In August, according to TrimTabs, the BEA will get better Q1/2009 data and revise the 2009 data and estimates through July. Of course, TrimTabs believes the revisions in August by BEA will move toward the estimates TrimTabs is making now.

Hat tip to SA commenter dcb, who provided the link to the TrimTabs report (here).

Comments

[Fighting Yoda:]

The report somehow is in some unreadable format - does not scroll.

Yes BEA data is based on surveys and models - so it can often be inaccurate but the trend is higher savings. Also some other data showed the saving rate is higher than even the wage rise (wage rise is mainly due to lower pay roll taxes).

Jul 05 04:09 AM

[Mistrofan:]

:) LOL - and is this supposed to be a surprise? The so called "offical" data is as trusty as the bookmaker that tries to sell you a bet. Long live the governments (n the moon not here).

Jul 05 11:49 AM

[John Lounsbury:]

Fighting Yoda - - -

I'm not sure why you have a problem. I just checked again and I can still scroll. Howver, you can hit the download button near the top of the screen (RHS) and get a much more readable PDF copy.

Hope this helps.

Jul 05 12:40 PM

[Steven Hansen:]

as you know i believe that consumption and spending data do not match. this explains the problem somewhat.

whenever we have a seismic economic shift (which is what is happening), all data produced by modeling is suspect. the danger here is that both government and business are making decisions based on this data - and these decisions are flawed.

Jul 05 07:46 PM