RE and economic charts: Double Dip Delayed, Not Derailed; Understanding Consumer Spending

Sunday, October 31, 2010

Double Dip Delayed, Not Derailed; Understanding Consumer Spending

[mEDITate-OR:
miss out on Mish Shedlock's stunningly informative graphs...
and
a very unusual and accurate explanation of what "consumer spending" is, and is not.

In Mish's 1st chart he shows U.S. how stunningly weak this so-called "recover" really is.
Not only is it FAR below the average at this stage, it is the weakest of all prior recoveries.

In his contribution chart on the right, what Mish does not mention is that "personal" consumption is skewed UP by the inclusion and increases in Medicare & Medicaid spending. IF we back out that, personal consumption went down, not up.

THAT explains, and is shown to U.S., in Mish's 2nd chart.
While what we said that we were spending started to go up from Jan 2 July, it then collapsed to even less than last year.
Please, note, that when spending started down in May 08 that was the beginning of the RE and jobs collapse Far Right before the election.

Mish's 3rd chart is absolutely stunning.
First note the correlation with the consumer spending decline noted above in the 3rd Q of 08 !!
Second, note that "unemployment" does not even begin to explain the extreme fall off of income tax receipts !
Third, note that the spurt in sales tax receipts after the 3rd Q of 09 is directly tied to the beginning of sale tax increases passed by state legislatures, trying to stem the bleeding.
Fourth, note that in the charts last Q income tax receipts are now going back down.

Mish's table, 4th below explains some of the shifts.
While person income taxes were recovering, now they are not, as much.
More to the point, business income taxes dropped earlier and from Q2 of 07 by more than PIT or sales taxes. And, plunged in the tables last Qr.
So, that while the sales tax increases WOULD have stopped the bleeding, the collapse of PIT and CIT have more than offset that.

Ouch.
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