Bulletin: Income and Spending Growth Don't Cool the Economy

So why does everyone act like this economy's slowing down? Plus, the debut of the Invisible Body.
Publish date:

It's A Doggy-Dog World

JACKSON HOLE, Wyo. -- Hey.

Disposable (after-tax)

personal income

posted a 4.9% (annual) increase during the second quarter following a 4.8% increase during the first.

Compare that to a 4% increase last year and a 4.7% increase in 1997.

And now answer me this.

Given that consumption growth is currently accelerating at its fastest pace since April 1997, and given that consumption accounts for roughly 69% of

gross domestic product

, and given that consumption positively boomed during the past two years under income increases littler than the ones prevailing now, and given that the labor market is still tightening so much that the third and fourth quarters are already likely to produce income increases even bigger than the ones we saw during the first half of the year -- given all that, why is it that the popular press and most economic forecasters continue to insist that the economy is seriously cooling? And that it will continue to do so?

Income equals fuel for spending.

And there is gobs and gobs of it out there right now.

Trade Me (or Monday, Monday)


Here's something kind of interesting.

Your narrator tracks the price components of five regional purchasing indices: The


, the


, the


(formerly the

New York

), the


and the



Not one of those price components posted a decrease in July. The Hillary held steady and the other four rose.

That same kind of pattern has emerged twice lately. Once in March, and then again in April.

And the price component of the


rose 7.3 points in the former case and 6.7 points in the latter.

So is it guaranteed that the July NAPM

report to be released Monday will reveal a pop in prices?

Hell no.

Sure seems like a fun little trade, though.

Side Dish

How much would you pay to see a Cramer-Padinha Celebrity Deathmatch on our television show?

Nothing. Not interested.

No more than $10.

No more than $40.

No more than $100.

Name your price. My company will sponsor it.