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PeakTrader said...

"Real personal consumption expenditures increased 2% in July."

It may be a blip rather than a sustained improvement:

Consumer Sentiment Improves as U.S. Merchants Discount: Economy
August 31, 2012

"The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, fell to 65.1 from 65.6 in July.

That drop is more in line with other confidence measures that were depressed by more gloomy projections. New York- based Conference Board’s index decreased to 60.6 in August, the lowest level since November, from a revised 65.4 the prior month, figures from the private research group showed this week.

The Bloomberg Consumer Comfort Index hovered close to a seven-month low last week, according to figures reported yesterday.

“A major source of uncertainty is about when the fiscal cliff will be bridged, and who will bear the burden,” Richard Curtin, chief economist for the consumer sentiment survey, said in a statement. “This uncertainty will increasingly cause consumers to become more cautious spenders.”"

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It may be a blip in the context of the slow recovery and slowing expansion.

Real PCE should be much higher, given the economy is underproducing by $1 trillion a year.

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PeakTrader said...

Gordon Young says: "So if you're the Red Sox and you continually get beat by the Yankees, who have a rotating collection of players over the years who hit in the .300s, then you shouldn't mind because it's not the same players beating you every year?"...etc..

Your comment reflects an "us" vs "them" mentality.

We're all on the same team.

If you're a poor hitter, you should be happy a great hitter is taking up the slack.

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Gordon Young says: "the U.S. has lower income mobility than many other countries..."

You're assuming income is measured the same way between countries.

In the E.U.-27, for example, a larger proportion of income reflects government compared to the U.S..

Also, in the E.U.-27, which has a GDP equal to the U.S., but has 200 million more people (or per capita income is much lower), people live in much smaller houses, drive small cars or ride bicycles, and consume much fewer private goods.

In the U.S., an unskilled immigrant, who couldn't find a $2 an hour job in his home country, can make over $50,000 a year with overtime moving to the U.S. and working, e.g. in energy, construction, or transportation.

In 2007, 20% of U.S. households earned at least $100,000 a year. Many of those workers are in industries that didn't exist 30 years ago.

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http://www.blogger.com/comment.g?blogID=28997633&postID=1269503118909495390

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Studies (Consumption Inequality):

http://www.hoover.org/publications/policy-review/article/123566

http://www.economie.uqam.ca/PDF/paper1106.pdf