Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Friday's IndicatorsUS personal income was .1% lower in July, reflecting continued weakness in the job market, but private sector wages were actually up $6.7 billion after a big decrease of $24.5 billion in June. July consumer spending rose .2%, powered by cash-for-clunkers, and the June figure was revised upwards to an increase of .6%. For the second quarter, spending fell at a 1% annualized rate. Savings fell as incomes were squeezed, to 4.2% from 4.5% in June.The fact that the private sector is starting to put some money on the table is good news, but one has to wonder how much of it is being confined to top earners. The fact that savings fell so much may be a consequence of such skewed distribution. And if that is the case, the implications for a relatively quick economic recovery must remain in doubt. On Wall Street, positive statements by Dell (despite a steep drop in 2Q earnings) and Intel (on the basis of a more optimistic sales forecast) have failed to energize the stalled tech sector at the time of writing, at about 11.00 am EST. The UK, unlike its continental counterparts France and Germany, saw negative second-quarter growth of .7%, according to the Swiss newspaper Neue Zuercher Zeitung (for some reason I couln't find this story in the headlines of the UK dailies). But UK house prices rose in July for the third straight month, and at the highest rate in five years. In Japan, which will hold a general election on Sunday, unemployment hit a record high of 5.7% in July, while deflation of 2.2% continued to ravage the positive growth figure announced a fortnight ago. This will no doubt contribute to the widely anticipated big defeat for the ruling Liberal Democratic Party. Ambrose Evans-Pritchard noted yesterday that Japanese exports fell yet again in July, with big declines in exports to its major partners China and the US. And the Baltic Dry Index, a key barometer of international trade, has been falling for 11 weeks, as Evans-Pritchard says. Finally, LIBOR, a key set of interest rates for banks lending to each other, continued a dramatic recovery since the collapse of Lehman Brothers saw them rise to unheard-of levels last September and October. Still, however, smaller banks are finding it difficult to borrow at low rates. All in all, the data remain disturbingly mixed. Signs of strength are offset by continuing imbalances and unwindings across the board. And there's no way economies can stand on their own feet without historic levels of government support. Labels: Ambrose Evans-Pritchard, consumption, corporate earnings, Dell, economic indicators, intel, Japan, LIBOR, personal income, Trade, United Kingdom Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
