Unexpected By Whom?
The BBC reports that US personal income falls unexpectedly in September
US personal income registered an unexpected fall in September, while consumer spending was also weak, data from the Commerce Department shows.
Households saw their earnings fall at an annualised rate of 0.1% compared with August, the largest fall in personal income in 14 months
In August, incomes rose by a revised 0.4%.
The market is expecting that the Federal Reserve will announce a new round of quantitative easing this week.
Analysts had expected earnings to rise by 0.3%
…However, analysts say the data does reveal a sharper slowdown than expected in consumer spending that could be a drag on growth during the remainder of the year.
When these “analysts” interpret the recent increase in manufacturing as anything other than the expected increase in inventories for the Christmas season, you know they have lost the thread and are disconnected from the real world.
In the real world, purchases increased because of the start of school, and nothing more. It happens every year if the “analysts” bothered to check. It was not the beginning of anything other than school, because governments below the Federal level are laying off people due to budget constraints, and are not giving raises for the same reason.
Quantitative easing won’t do anything but change numbers in the Fed’s spreadsheet, because the banks are not going to lend money when they can see deflation coming, which is why people are buying Treasury bonds at what amounts to negative rates.
2 comments
Bryan, last week the Treasury sold bonds at *LITERALLY* negative rates — as in, bond-buyers were paying $120 for bonds with $100 face value upon maturation. That is… bizarre, even for TIPS bonds, which are the red-headed stepchild of Treasuries, with little secondary market and little interest from serious investors (who prefer to buy regular Treasuries at sufficient discount to deal with future inflation, rather than TIPS bonds that sell at a premium compared to regular Treasuries such that the yield is typically at least 10% less). But still. The mind boggles. Deflation, indeed…
– Badtux the Depression Penguin
They must be the phantom bond vigilantes who don’t seem to have read the script.
At this point the old savings bonds are looking better than most CDs.