Have we seen any data on credit card usage in January? Less money usually equals more credit used for gas and groceries.

maables on March 1, 2013 at 1:57 PM

Ooh, good point!

No, when the gift cards are sold, they become a liability on the company’s books. That’s why companies have started to expire gift cards over time to remove those commitments from the books. When the card is used, the liability is removed from the books and the income is recognized. The expiring gift cards are pure profit to the company since no product cost is incurred.

AZfederalist on March 1, 2013 at 12:34 PM

Thanks! I took a couple accounting courses back in college, but it has been awhile. I knew it went on the books as a liability. I wasn’t sure when/if the sale would be “counted” by the government as consumer spending.

Then explain the disappointing year-over-year numbers.

Steve Eggleston on March 1, 2013 at 12:59 PM

.
After he answers that, I’ll ask him what importance he attaches to the Dow given Fisher’s statements admitting the Dow et al would be back to March of 2009 without the Fed’s QE.

stenwin77 on March 1, 2013 at 1:01 PM

I always thought the definition of inflation was “the numbers go up for everything but it’s all ‘worth’ the same.” Could be wrong tho.

Everything costs more.

This is a month to month number, and income surged in December due to year-end dividend payments, etc. A little larger drop than expected, but nothing to panic about …. will we break through today? Dow is teasing …

TouchdownBuddha on March 1, 2013 at 12:53 PM

Then explain the disappointing year-over-year numbers.

Yesterday’s unemployment news ( inaccurate and much to high for the 70th or 80th week in a row (I lost count) ) wasn’t exactly peachy, but the SRM (state run media) says that shows stregthening in the job market.

Would that be the market for hack writers of econobabble?

With the pay roll tax expiration, higher taxes, higher energy costs, and higher health care premiums – with lower personal income tossed in for good measure – I don’t see how retailers can expect a good year.

DRayRaven on March 1, 2013 at 11:56 AM

Unless they are in the business of supplying prepper goods, firearms, or ammo.

Is anybody else listening to this crap that obambi is spewing?

VegasRick on March 1, 2013 at 11:56 AM

sorry dude, can’t stand the sight or sound of it…

This also shows that the mini-apocalypse predicted because of the expiration of the payroll-tax holiday was nonsense.

Um, ya, if you consider a drastic drop in savings rates a good thing.

One of us is missing something …

If the manufacturer increases the cost per ounce for Corn Flakes (higher cost/smaller package – which is not tracked by the PCE) haven’t they inflated their margin?

This applies across the board on things like kitty litter, dog food, etc.

Another thing IGNORED by the PCE’s – the increase in the cost of the gas IS tracked. The increase in government taxes levied as a percentage of the cost of the gas IS NOT.

PolAgnostic on March 1, 2013 at 12:23 PM

I think we’re whistling over the difference between the consumer spending and PCE.

Wouldn’t that count as November/December spending, when people actually paid for the gift cards?

DRayRaven on March 1, 2013 at 11:58 AM

No, when the gift cards are sold, they become a liability on the company’s books. That’s why companies have started to expire gift cards over time to remove those commitments from the books. When the card is used, the liability is removed from the books and the income is recognized. The expiring gift cards are pure profit to the company since no product cost is incurred.

The shrinking packaging trick only works if one doesn’t buy more packages to compensate. It does work with individual-serving items like frozen chicken cordon bleu (which have shrank to 5 oz from 6), but it doesn’t work so much with bulk items such as cereal.

Steve Eggleston on March 1, 2013 at 12:13 PM

?????

So people feed their children less cereal ???

“Sorry, honey. I know you’re a growing child but General Mills has increased the cost of Corn Flakes by 8% so you have to eat 8% less so we can stay on budget.”

The shrinking packaging trick only works if one doesn’t buy more packages to compensate. It does work with individual-serving items like frozen chicken cordon bleu (which have shrank to 5 oz from 6), but it doesn’t work so much with bulk items such as cereal.

Steve Eggleston on March 1, 2013 at 12:13 PM

.
One of us is missing something …

If the manufacturer increases the cost per ounce for Corn Flakes (higher cost/smaller package – which is not tracked by the PCE) haven’t they inflated their margin?

This applies across the board on things like kitty litter, dog food, etc.

Another thing IGNORED by the PCE’s – the increase in the cost of the gas IS tracked. The increase in government taxes levied as a percentage of the cost of the gas IS NOT.

Consumer spending rose, however, which means that the potential for economic growth remains — if we tool our policies to encourage it. This also shows that the mini-apocalypse predicted because of the expiration of the payroll-tax holiday was nonsense.

It’s too early too say we avoided a mini-apocolypse. It’ll take a few months for folks to readjust their spending habits for their lower incomes. 1Q 2013 will be weak.