Notice that the White House stopped talking about “Recovery Summer” a while ago? Today’s new releases from Commerce may help explain why. Personal income dropped for the first time since the technical beginning of the recovery in July 2009. Not surprisingly, consumer spending slowed even with the back-to-school sales season:
Americans slowed their spending in September to the weakest pace in three months and their incomes fell for the first time in 14 months.
Personal spending rose at an annual rate of 0.2 percent in September, the Commerce Department said Monday. That’s below the 0.5 percent gains recorded in July and August.
Incomes fell 0.1 percent in September, following a 0.4 percent rise in August that had been pushed higher by the return of extended unemployment benefits.
The drop in incomes was the first decline since incomes fell 0.3 percent in July 2009. The August gain had been skewed by the reinstatement of an extended unemployment benefits program, which had temporarily lapsed in July after Republicans had blocked an extension.
How did Reuters report the news? Take a guess:
U.S. consumer spending rose by less than expected in September as income fell for the first time in 14 months, while inflation remained muted, according to a government report on Monday that reinforced expectations of more monetary stimulus from the Federal Reserve this week.
Reuters predicted a 0.4% increase in personal income in September, meaning that they got the direction entirely incorrect … again.
These are major economic indicators, but a pair with more interest to the technically inclined than the general public. What they do, though, is confirm the general impression that the economy has stagnated at low- or no-growth levels, rather than show any indication that current economic policies are helping. This won’t shock voters, who (unlike Reuters) won’t exactly view the news as unexpected. For those paying attention, especially those making last-minute decisions on voting, it will show the need for a serious change in direction.
Note: The front-page image comes from this editorial cartoon by Michael Ramirez of Investors Business Daily. Ramirez has a terrific collection of his works: Everyone Has the Right to My Opinion, which covers the entire breadth of Ramirez’ career, and it gives fascinating look at political history. Read my review here, and watch my interviews with Ramirez here and here. And don’t forget to check out the entire Investors.com site, which has now incorporated all of the former IBD Editorials, while individual investors still exist.