Friday, December 17, 2010

Personal Income Rebound is Widespread

The chart below shows the year over year change in personal income across regions. In my opinion, the key is not to analyze which regions have done better (almost impossible with the below color scheme), but to see that ALL regions are rebounding (though still below old levels).



The issue is of course whether this is sustainable. The rebound was due to the government stepping in. The question is will the private sector bounce back before the goverment's support wanes.

Source: BEA

6 comments:

  1. SPECTRE of DeflationDecember 17, 2010 at 6:49 AM

    The answer to your last question would be a "no". We are still deleveraging, and the amount of personal wealth destroyed dwarfs anything the government has been able to do, or will be able to do. The fools have not learned that you can't fix a debt crisis with more debt. At this point we are buying our own paper just to fund our current operating expenses as a nation, and we are approaching debt to GDP of 100%. Good luck to all, as you will need it!

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  2. have an interesting chart i plan to post at some point showing national savings rate (net savings of individuals, corporations, and the goverment). for the first time since the great depression these levels turned negative and are still negative. this means we are reliant on external sources of funding for our current level of consumption. as you detail, this is not sustainable. it will either reverse and absolute savings will increase through a higher savings rate (which will cause the economy to delever) or the private sector grows and allows the absolute level to increase without a jump in savings (i.e. goldilocks).

    i think the private sector continues to improve on the margin for the near-term, but at some point we need to see major restructuring for this to be a long-term path to recovery.

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  3. #The issue is of course whether this is sustainable

    no its not a issue .. issue is can we trust data from BEA...
    asnwer... 100% no...

    why.. lest look at my best sample..
    some time ago BEA said that corp profits ALL TIME HIGH,, fine i said... then lets look at
    FED CORP TAXES paid by corps as in monthly/daily treasury statement..

    my point was if profis all time high,, the corp taxes paid in real $$$ must be somehow close or better all high...
    WELL.. ITS COURSE IS NOT WHAT HAPPENED.. ON 12 MONTH SUMM CHART CORP TAXES PAID ARE STILL 50% BELOW PEAK..

    well how is it possible ??? i let reader to make to research..

    point is ALL DATA FROM BEA/BLS is fake, bogus, junk.. its same mass media inforamtion from guys who missed all crisis 2000-nasdaq, 2006-housing, 2009 etc...

    alx

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  4. i am no tax accountant, but couldn't taxes paid be significantly lower than profits due to realizing losses from the downturn to offset some of these gains?

    i personally have a lot of gains from my trading portfolio this year (pat on back, though not hard when every asset rises) and will be using past year losses that i will be realizing this year to offset the taxes that i pay.

    seems more likely to me that this or another reasonable scenario is true, rather than the conspiracy theory angle on corporate profits, but that is just me...

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  5. SPECTRE of DeflationDecember 20, 2010 at 7:15 AM

    They also say businesses are flush with cash, yet they never look at the other side of the balance sheet to see that it was all borrowed and will blow up in the future. These companies turned their debt with lower rates, but then borrowed even more which must be turned once again the future. At some point down the road the ability to hold rates down will evaporate, and these business will go KA-BOOM!

    It amounts to paying off $10,000 with another credit card with lower rates, and why not borrow an additional $10,000 while we are at it. How did this scheme work for all the J6P's out there?

    Assets = Liabilities + Owners Equity

    Nothing on Earth can change that formula forever. They can play games, but in the end, this formula will be the ruin of them all.

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  6. Spectre- point taken, but corporations have added a lot of E to that equation since the crisis due to subsidized financing and lot of competition from small business

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