One reason that I am unconvinced that we are in anything that can credibly be called “recovery” is that the US states have been turning in increasingly poor economic data throughout, especially in my favorite data series, ‘sales tax.’ It’s my favorite because sales tax receipts are not subject to statistical massaging or seasonal adjustments. They are merely collected and reported.
I’ve never been able to satisfactorily resolve the gap between Federal Government reports of steadily increasing levels of consumer spending/income vs. declining sales tax receipts and stubbornly high unemployment.
Let’s begin with the federal data on spending and incomes:
In nominal terms (not adjusted for price changes), incomes rose 0.4% in May while spending increased 0.2%.
“Consumption has slowed only modestly” from the first-quarter’s 3% pace, wrote Maury Harris, chief U.S. economist for UBS. “The building momentum in income and the increase in the saving rate pave the way for faster spending ahead.”
(Source)
It’s amazing to me that incomes can be climbing like they are with the employment situation as lackluster as it is. Without joking at all, I wonder what the income data would look like if we stripped out banking bonuses and income?
Because the data is annualized, even the payout actions of a single company can completely drive the data series, as happened in December 2005, when Microsoft made a single special dividend payment of $32.6 billion and boosted personal income to a heady 2.6% for the month.
Of course, the fact that a couple of million people may suddenly fall off of extended government unemployment benefits is not going to help either their income or the spending side of this story in the future.
Jobless Bill Dies Amid Deficit Fears
June 25 2010
WASHINGTON—Spooked by concern about deficits, the Senate shelved a spending bill that included an extension of unemployment benefits, suddenly cutting off a federal cash spigot opened by President Barack Obama when he took office 18 months ago.
The collapse of the wide-ranging legislation means that a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week. It will also leave a number of states with large budget holes they had expected to fill with federal cash to help with Medicaid costs.
by davos 
