Real Disposable Income Up in Q2

According to today's BEA report (Table 10), real disposable personal income increased in July by 1.2% compared to July last year, following a 3.4% annual increase in June and 6.3% increase in May (see chart above). Both growth rates (May and June) were above the 2.6% average growth in real disposable income since 2001, following 7 months (October 2007 to April 2008) of below-average growth (see chart above). On a monthly basis, the July growth in real personal disposable income was negative at -1.7% (from June).

 
Although real disposable income growth showed weakness in the last quarter of 2007 (0.6%) and the first quarter of 2008 (-0.7%), the above-average, year-to-year growth rates of 6.3% (May) and 3.4% (June) contributed to an 11.4% increase in real disposable income during the second quarter 2008 (see Table 6), one of the biggest quarterly increases in history, largely due to the the Economic Stimulus Act of 2008. According to the Joint Committee on Taxation and the Congressional Budget Office, "rebates to individuals are expected to total $106.7 billion for 2008. The majority of rebates were sent during the initial round of payments, which began April 28, 2008, and will continue on a weekly basis through mid-July 2008."

Comments

[2houndz:]

2 questions:
1 What are you smoking?
2 What is your agenda?

2008 Aug 29 05:26 PM

[Wesley Mouch:]

I enjoyed reading the article and appreciate the author's point of view, but am struggling to match the data and analysis presented with observation.

If real disposable income was increasing at the rates listed, would we not experience increases in the savings rate, or see the retailers expand? The coincident absence of both makes me wonder if the understatement of inflation is skewing the metric.

2008 Aug 29 08:47 PM

[mekats:]

I agree that the systematic understating of inflation yields high "real" metrics at a time when opinion/confidence surveys are providing grimmer evidence.

2008 Aug 30 08:06 AM

[notsosmart:]

dont believe this funny #s.2 people in a room.one is jobless the other earns $100,000.the average income is $50,000.tell that to the unemployed person.the silly article by this prof. makes me LOL.

2008 Aug 30 09:07 AM

[lblaine:]

Unemployment is increasing, including Wall Street. GS paid $30 billion in compensation in 2007, but less than $1 billion to shareholders as dividends. It is preferable to work on wall street, not invest in Wall Street. This disposable income has been distorted by the massive speculation on Wall Street, and payout of obscene bonuses, at the expense of shareholders. The day of reckoning is coming.

2008 Aug 30 09:46 AM

[ain't no fo...:]

houndz, this guy publishes this manipulated nonsense every day... he's probably scrambling for a flunky position in the George W. McCain administration, its always the same misconstrued garbage about how swell everything is... if you believe a word he has to say I have a bridge to sell you. Its in Minnesota, it fell down last year due to neglect and killed a couple dozen people, but 99.9999% of the time its been a swell bridge, a great fixer-upper. Mr Ph.D. (what a joke) highly recommends that bridge.

By the way, you obviously don't seem to know it, but the Dow 's run this past week to over 15,000 set a new all time record, and with the S&P 500 approaching 1600, Wilshire 5000 at 17,000 and NASDAQ Composite breaking out above 3000 again I believe we are on the cusp of a new dawn for US equities. Fannie and Freddie back in the 50's has been a wonderful confidence booster for the markets, and with the great increases in home values the author trumpeted earlier this week, I see grand days ahead for the Empire.

Oh, btw, I don't think its what he smokes, but in my opinion it may be what he drinks.

2008 Aug 30 10:43 AM

[notsosmart:]

just dont bother reading this guy

2008 Aug 30 11:43 AM

[sabbadoo32:]

I was intrigued by the headline, as I had yet to open the email with the info from the government. I re-read the head, saw the graph, and felt my head start to spin.

Hey Mark, you've got an advanced degree. Use it.

2008 Aug 30 12:42 PM

[Tick Talk:]

I hate seekingalpha. This is the umpteenth BullShizz story I've read. Even the BEA's alert e-mail (which anyone can subscribe to) plainly manifested the crisis. Here is my blog article from yesterday that covered this topic and prints the exact wording from the alert: www.ticktalklive.com/2.../

2008 Aug 30 01:41 PM

[win:]

Why not just point out what's questionable about this article instead of making ad hominem attacks?

Real Disposable income obviously increased as a result of the stimulus payments. How is that news? It would be nice if you had some predictions on what would happen to Real Disposable Income (RDI) AFTER the stimulus payments are done.

Take a look at this graph from the Government BEA, people. It may be more helpful:

www.bea.gov/briefrm/dp...

And, yes, Mr. Perry, I do wonder about your motives.

2008 Aug 30 04:51 PM

[Steven Hansen:]

reading the news release of the BEA, it shows negative trends. this is seeking alpha - we are looking for signals. this article is misleading.

2008 Aug 30 08:50 PM

[Lucmee:]

I suspect that disposable income is up due to the fact that a lot of folks are no longer paying mortgages... therefore they've got a few bucks to go out and buy the odd bag of groceries and bottle of booze. And if you've got no house... An iPhone and a laptop are the way to go...Huh?

2008 Aug 30 08:57 PM