18 ms·
U.S. personal income posts first drop in over three years
- SolaceQuantum 8y ago"Income was weighed down by decreases in dividend, farm proprietors’ and interest income. Wages increased 0.3 percent in January after rising 0.5 percent in December." I have no education in economics, but does this imply that it is becoming less lucrative to invest money? (Also, later in the article, it says that purchasing dropped sharply in December. How is it that wages are growing, job market is hungry for more labor, but consuming is dropping?)
- addicted 8y agoThere could be time lags between those indicators.
- WillPostForFood 8y agoThe Personal Consumption Expenditures number from the Federal Reserve is seasonally adjusted. A decline in a seasonally adjusted number can actually a lower than expected increase.
- leereeves 8y agoWages up, investment income down? This sounds like cause for average people to celebrate. Wonder why the headline is focused on the negative aspect...
- r_smart 8y agoWhy would I want to celebrate someone else making less money?
- olefoo 8y agoIf their revenue is coming at your expense. Due to say, stronger consumer or environmental protections.
- r_smart 8y agoYou have no proof that any of that is the cause. So at the very least, celebration is probably premature.
- leereeves 8y agoBecause that money comes from someone. If wages are up and investment income is down, money is being transferred from the 1% to the 99% for a change.
- r_smart 8y agoWealth isn't a zero sum game. Further, that money is being transferred voluntarily. People buy things like iPhones because they think it enriches their life more than having the $600 it costs. Hundreds of millions of people believe this, so Apple has a ton of money. There were no victims in the transactions.
- bbddg 8y agoWhat about the person working at a Foxconn factory with suicide nets?
- leereeves 8y agoJust to show that the example doesn't prove much: millions of people voluntarily spent money on narcotics too. Entertainment products aren't making consumers richer in the long run. Correcting income and wealth inequality will help ensure the long term health of the economy, and once that's done, we can have another debt-financed consumption binge, but the current binge can't last forever without consequences.
- mjburgess 8y agoWealth inequality is productivity inequality, not having-less of a fixed amount. "Fixing" wealth inequality by decreasing the productivity of the wealthy is madness. "Inequality" is a feature of exchange and production, it cant be "fixed". The lives of those who suffer most can be improved by helping them be more productive. Not by hobbling everyone else. That fails to improve anything. EDIT: To clarify, the inequality is in what you can do with your total current assets: including time/effort, but CURRENT WEALTH. Yes, Jeff Bezos can do more with $100B than you can with $100. And yes, you with 100$ can do more than a person with 1$. People in poor countries produce things at a rate and with such general demand that their current assets (including their time/effort) arent very productive. Bezos can make another billion without taking it from anyone, just by deploying his assets better than you cna.
- defertoreptar 8y agoNot to mention how they swept quarterly GDP growth under the rug. GDPnow was expecting 1.8, and it instead was 2.6.
- rootusrootus 8y agoWasn't the GDP number a bit of BS due to so much of it being inventory?
- ionised 8y agoAre real wages really up when inflation and cost of living, healthcare rises are factored in? Everything I've read suggests real wages have been stagnant since the 70's.
- castlecrasher2 8y agoThe article says "wages up .3%"
- ionised 8y agoRead the rest of my post. The question stands, because the article doesn't specify whether it is talking about wages or wages in real terms. Someone mind explaining what these downvotes are for? All I asked was a question. This place is becoming like Stack Overflow.
- amanaplanacanal 8y agoThose numbers are always inflation adjusted.
- ionised 8y agoGood to know, but I wasn't aware.
- amphibian87 8y agoSo, a negligible amount?
- uxp100 8y agoHow much do you expect wages to rise in a month?
- TheCoelacanth 8y agoThat is not a negligible amount of growth for a single month.
- witcherchaos 8y agoUS wage is growing though. Money is flowing into US at an unprecedented rate due to: a.) Fed raising interest rates to a normal level. Government bonds are now earning close to some of the faster developing countries, without the risks. b.) Brexit impacting the growth of EU. Germany narrowly avoids recession....for now. But grew only 1.5% in 2018. There's still the matter of a possible US tariff on EU automobiles. And Italy/Greece/Spain debts are still a thing. c.) Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%. Overall car sales dropped 13%. Stock market dropped 22%. Real estate sales in January 2019 dropped 44%. d.) Asian countries impacted by China's fall. South Korea's export to China dropped 14% in 2018. Japan dropped 8%. Taiwan dropped 10%. Singapore dropped 8%. e.) Uncertainties and high debt ratio in developing countries, prompting money to seek safe harbor. Tariff and protectionism impacts. f.) lastly, US is growing at a healthy 3% in 2018
- pas 8y agoHow does the Fed interest raise helps with more money flowing into the US? I mean okay, money flows into US "saving accounts", but due to higher interest rate a lot of investments will be put on hold, no? The Fed raised the target federal funds rate, which is the rate of the interbank overnight repo market, which is basically the "back office" clearing house between the accounts of creditors and debtors. And all of this means that the NY Fed's trading desk does a lot of open market transactions to reach that goal. (It converts cash in banks' reserve accounts into US Treasury bonds, thus forcing banks to increase their reserves - to meet requirements, hence forcing banks to loan reserves from other banks, which pushes up the overnight repo rate.) How does this effect the US Treasury bond auction rate? (In theory banks [and other primary dealers that participate in the auction] just use loans (excess reserve) to buy bonds, so if excess reserve is less, then fewer banks are able/willing to buy bonds, so yes, that pushes up rates, but the target-FFR increase only affected US banks, and US T-bills are bought by a lot of foreign entities.)
- appsonify 8y agoall I know is they raise interest rates, it absorbs up the money supply in circulation due to the attractive yields on the Ts also the whole trope about 'China owning most of US T-bills' is actually false, there is apparently T-bills that are specifically sold to foreign nations, and then there are the real T-bills that not many countries own. The other one is an IOU and may not be honored, say during wartime.
- ryansmccoy 8y agoJust an observation, but I've noticed that Reuters is not a fan of the current administration.
- twayback 8y agoMAGA, not working?
- ionised 8y agoWas it ever?
- collyw 8y agoSeems to have done better than Obamas economy.
- cdelsolar 8y agogo back to the_donald
- s_y_n_t_a_x 8y agoHe's not wrong.
- rootusrootus 8y agoActually, he is.
- collyw 8y agoBy what measure?
- ionised 8y agoThe effects of economic policies of one president typically aren't felt until the term of the next president. The (specific and limited) growths you are seeing are a result of Obama-era policies. Trumps will start to show after he's left office most likely.
- jotjotzzz 8y agoWaiting on the trickles of the "trickle down" economics. I bet CEO salaries are doing just fine.
- hugh4life 8y ago"U.S. personal income fell for the first time in more than three years in January as dividends and interest payments dropped" It hit the people with stocks and money in the bank the most.
- drak0n1c 8y agoThe source says wages went up while dividend/interest income went down.
- sempron64 8y agoActually CEOs make the bulk of their money as capital gains, not wages, since they are compensated in stock options. Per the article wages are up 0.3%, which means normal people on a salary or hourly with no/insignificant investments have more money in their pockets. So this actually is money trickling down.
- magicnubs 8y ago> So this actually is money trickling down. Isn't this actually just money trickling up less quickly than before?
- asatterfield54 8y agoNew year + tax return tends to lead people to spend a bit more. Anecdotally I'd expect the downward spending trend to continue. Majority of the customers I interact with (barista programmer checking in) I know are asking themselves "do I need this?" before they buy. Most have cancelled their Amazon Prime subscription and stopped buying there altogether, which for many was the equivalent of an online shopping spree.
- cobookman 8y ago+1. Noticed this trend as well
- davio 8y agoThis coincides with Marie Kondo's arrival
- pas 8y agoCould you provide some context? Why is she important for US incomes? Arrival of what kind? Where from / to?
- dgacmu 8y agoIt was humor. She advocates asking whether or not an object "brings you joy" before deciding whether or not to buy or keep it. A very popular person on the topic of keeping your home organized.
- Swizec 8y agoMillenials generally speaking are broke, inundated with loans, and the resulting zeitgeist is antimaterialism. Marie Kondo’s popularity is a symptom of this trend. People don’t want to buy crap anymore. That’s why instagram is full of travel pictures not of “I bought a house/car/etc” pictures. Us millenials don’t see possessions as a status symbol anymore but almost as a liability.
- 8y ago
- coinward 8y agoDo these measurements consider inflation?
- zaroth 8y agoThe drop coincides with the market tanking at the end of last year, due to the Fed badly miscalculating their rate hike policy. TFA omits this context, and glaringly doubles down on the omission when they state; “The report from the Commerce Department on Friday also showed inflation pressures remaining tame, which together with slowing domestic and global economic growth gave more credence to the Federal Reserve’s “patient” stance towards raising interest rates further this year.” The Fed caused tremendous damage at the end of Q4 with their breakneck rate hikes in the face of record-low inflation. They sucked over a trillion dollars out of the economy which is why the numbers are down. To write that this gives credence to the Fed’s “patient” stance is wallpapering over the real story, and it smells politically motivated.
- SlipperySlope 8y agoNailed it. Plus tariffs are voluntary taxes drawing from funds from importers. The economy will slow down as it adjusts to re-industrialization with higher prices paid out as wages to USA workers.
- tomrod 8y agoI disagree. Tariffs are the culprit here, rate hikes were needed and long announced. Really, the 2018Q4 expenditure, mostly unfunded due to the tax changes, hit at the same time as the full Fed rate impact landed. Fiscal hamfist refuses to acknowledge the monetary hand.
- apercu 8y agoActually, tariffs seem to me to just another consumer tax.
- Dangeranger 8y agoTariffs are paid by the consumers of imported goods, not by the importers themselves. Costs are simply passed down as higher prices. The idea that an importer would absorb the tariffs doesn’t hold water.
- 8y ago
- dv_dt 8y agoI thought real wages had already posted drops. The numerical drop might be expected w/ real wages as a leader.
- scottlocklin 8y agoTax rates in high income states went up (limits on deductions for housing and state income taxes); no surprise.
- vonmoltke 8y agoTax rates and deductions have nothing to do these income and wage numbers.
- scottlocklin 8y agoIf you read the article, you'd know that the commerce department was talking about disposable personal income, which is post tax. Pre-tax, personal income went up. https://www.bea.gov/data/income-saving/personal-income https://www.bea.gov/data/income-saving/personal-income