Tuesday :: Nov 1, 2005

Happy Economic News

by Mary

You'll be happy to know that the economy is doing swell. Personal spending has increased by .5% and incomes rose by 1.7% in the last month. Things are so peachy-keen that when the Fed meets soon, Greenspan is bound to raise interest rates.

So what is the magic that is causing so much fine economic activity?

The 0.5 percent gain in spending last month followed a 0.5 percent decline in August, the Commerce Department reported today in Washington. Personal spending adjusted for inflation, which strips away the rise in energy prices, fell 0.4 percent after falling 1 percent in August, the first back-to-back drop since 1990. Incomes rose 1.7 percent, the biggest gain since December 2004, from a 0.9 percent decline.

Surging oil and natural gas prices forced consumers to pay more to fuel their cars and stoves last month, leaving less to spend on restaurants, clothing and entertainment. Rising home heating bills this winter will deplete bank accounts even more. The Federal Reserve, which is set to raise its main lending rate tomorrow, said this month that soaring energy costs are increasing inflation risks.

... Incomes bounced back because uninsured losses from Katrina in August were revised to $240 billion from $100 billion at an annual pace. Losses not covered by insurance fell to $5 billion in September.

Who says that energy is not inflationary? Why, that would be Mr Greenspan who will beat down inflation until it is dead. Of course, there might be a few American families lying in the ditch along with that dastardly villain, but that is why the Pentagon coined the term: collatoral damage.

Here's one more piece (via Brad DeLong) that tells how well our economy is doing today:

OWNERSHIP SOCIETY: A piece of stunningly bad news, from Louis Uchitelle's piece in the Sunday New York Times: "Thus far this year, the median weekly wage earned by blacks fell by 5 percent, to $523, adjusted for inflation, according to an analysis of Bureau of Labor Statistics data. Whites as a group are also experiencing a drop in their median weekly wage, but for them the decline this year is less than 1 percent, to $677, adjusted for inflation."...

Mary :: 12:30 AM :: Comments (32) :: TrackBack (0) :: Digg It!