Archive for the ‘Personal Income’ Category
Personal income increased $133.2 billion, or 1.0 percent, and disposable personal income (DPI)
increased $78.3 billion, or 0.7 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $23.7 billion, or 0.2 percent. In December, personal income increased $56.6 billion, or 0.4 percent, DPI increased $48.5 billion, or 0.4 percent, and PCE increased $56.5 billion, or 0.5 percent, based on revised estimates.
The problem is that this didn’t come from actual earnings:
Contributions for government social insurance — a subtraction in calculating personal income — decreased $94.9 billion in January, in contrast to an increase of $2.5 billion in December.
That’s the 2% decrease (temporary, right? Bahahaha) in FICA taxes. And it was most of the “increase” in income. There was an offset in unemployment insurance costs, but this was where most of the “gains” came from.
What’s disturbing through is that this “gain” didn’t pass through to spending. In fact, ex-inflation spending actually dropped.
Personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $22.1 billion in January, compared with an increase of $54.4 billion in December. PCE increased $23.7 billion, compared with an increase of $56.5 billion.
So spending increased by far less than it did in December. Hmmm….. looks like that “tax decrease” didn’t go anywhere – it simply offset higher food and gasoline prices, effectively shifting that inflation onto the Federal balance sheet in the form of more debt.
That’s not going to work in the intermediate term.
Real PCE — PCE adjusted to remove price changes — decreased 0.1 percent in January, in contrast to an increase of 0.3 percent in December.
Shocking Video Of Howard Dean Declaring That It Is The Job Of The Government To Redistribute Our Wealth
In the shocking video you are about to watch, Howard Dean declares that it is the job of the government to redistribute our wealth. Not only that, he says it in such a way that indicates that he believes that such a notion should be obvious to anyone with half a brain. Well, while it is true that the United States has become a highly socialized nation, the reality is that this is not what the founding fathers intended. The founders intended for us to live in a land where we would have enough freedom and enough liberty to be able to work hard and enjoy life, liberty and the pursuit of happiness. They did not intend for a gigantic federal government to take huge amounts of money from one group of people and give it to another group of people. In any nation where a large scale redistribution of wealth is happening, the incentive to work goes right out the window. Pretty soon you end up with an entire class of people that have learned how to “make a living” by being a parasite of the government, and that is not good for any economy.
If our founding fathers were alive today, they would be horrified by what we have turned into. In 1816, Thomas Jefferson wrote the following….
“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.”
The sad truth is that democracy starts to break down once people start realizing that they can vote themselves money out of the national treasury. In fact, that is a very large part of what politics in America is all about today. Politicians are constantly promising what they are “going to do” for various groups of people.
Benjamin Franklin once stated the following….
“When the people find that they can vote themselves money, that will herald the end of the republic.”
Not that our founding fathers were against charity. In fact, they believed in it very much. It is just that they did not believe in repressive taxation by a huge national government and they did not believe in large scale redistributions of wealth.
With all of that in mind, watch this shocking video of Howard Dean declaring that it is the job of the government to redistribute our wealth….
Obviously Howard Dean envisions an “America” that is very different from the one that our founding fathers intended.
But does that mean that all government welfare programs are bad?
Of course not.
In fact, if we were to cut them all off today we would have millions of people starving in the streets.
A very large percentage of Americans today don’t even know how to take care of themselves. If we pulled away all government support all of a sudden there would be chaos and anarchy in the streets.
The sad reality is that we have tens of millions of Americans that are now deeply dependent on the socialist system that we have established.
Unfortunately, this is what socialism does – it turns people into pets of the government. Our society should be teaching people to be self-sufficient, but instead we are teaching people to allow the government to take care of them from the cradle to the grave.
So does that mean that our founding fathers would be in favor of the rampant corporate greed that we are witnessing today?
Of course not.
As I have written about previously, the founding fathers were against all large concentrations of power. During the Boston Tea Party, it was the tea of perhaps the most powerful corporation in the entire world at the time (the East India Trading Company) that our founders dumped into the harbor.
If you study early American history, you soon come to realize that corporations were generally very limited in scope and size for many, many years. The era of the giant corporation is relatively new, and our founding fathers never intended for our society to be dominated by gigantic international corporations.
So when the Democrats argue that we should give more power to the federal government and the Republicans argue that we should give more power to the big corporations they are both wrong.
Our founding fathers did not intend for our federal government to have nearly so much power and they did not intend for big, wealthy corporations to have so much power either.
Fortunately, many Americans today are getting back in touch with those principles. There is a growing dissatisfaction with the size of government, and according to Gallup two-thirds of Americans are now dissatisfied with the size and influence of major corporations in America today.
However, it is one thing to discuss the finer points of political and economic philosophy, but it is another thing altogether to deal with the reality of tens of millions of people that cannot feed themselves.
As I have mentioned many times before, there are over 43 million Americans on food stamps today.
So what are we going to do with all of them?
Allow them to starve?
Almost 53 million Americans receive Social Security payments.
What are we going to do – cut off Social Security and watch millions of elderly and disabled people freeze to death in their own homes?
Of course not.
But we have got to start swinging the pendulum back in the other direction. Right now one out of every six Americans is enrolled in some kind of anti-poverty program run by the federal government.
How many Americans being taken care of by the federal government will be too much?
One out of five?
One out of four?
One out of three?
Eventually the entire system crumbles when there are too few people still willing to work hard.
If you ever get the chance to visit a communist country you should. You will notice that nobody really works very hard. That is because there is no incentive to work hard. Very little real wealth gets produced and everyone suffers for it.
So does that mean the U.S. system works?
Of course not.
What we have in the United States today is not real capitalism. It is more aptly called “corporatism”. The big corporations and the big financial institutions have accumulated an absolutely stunning amount of economic power and over the decades they have gotten the government to tilt all of the rules of the game in their favor.
In America today, it is really hard for the average person to start a successful business. The big, powerful international corporations that dominate our economy are everywhere.
So most Americans today have to rely on working for an employer. Unfortunately, the big employers have started to realize that they can make much larger profits by shipping our jobs overseas. That is really bad news for the U.S. middle class.
Well, can’t we just tax all of these big corporations like crazy and even everything out?
Unfortunately it just does not work that way in today’s global society.
As I have written about previously, the ultra-wealthy and many of the biggest corporations have figured out how to “minimize” their tax burdens. While you and I are being taxed into oblivion, the global elite have figured out how to move their money around to escape taxation as much as possible. In fact, it is estimated that today approximately a third of all the wealth in the world is held in “offshore” tax havens.
Ultra-wealthy individuals and mega-powerful corporations can call just about anywhere “home” in today’s global economy. That is just the way the world works now.
In order to “tax the rich”, you first must get legal jurisdiction over their money.
Our tax system has become entirely unfair and it simply does not work. The whole thing needs to be scrapped.
But as we discuss tax policy, there are tens of millions of Americans that are living in poverty.
So what are we going to do about the growing number of Americans that cannot even feed themselves without government help?
Well, the truth is that what they really need is not more handouts.
If you give people handouts, they will just need more handouts tomorrow.
No, what all of these Americans really need are good jobs.
Unfortunately, there are a whole lot less good jobs in America today than there were ten years ago.
Our politicians have stood by as the giant corporations have moved thousands of facilities over to places such as China and India where they can legally pay people slave labor wages.
Since 2001, over 42,000 U.S. factories have closed down for good, and that number is going to continue to increase unless someone stops it.
But nobody is.
Virtually all of our politicians are just standing off to the side with their hands in their pockets.
So now we have 19.3 percent of the workforce that is either unemployed or underemployed.
Our entire economic system is breaking down. Millions of Americans families are scrambling to find some way to survive. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them.
Other Americans are going very deep into debt because they don’t have any other options. When they finally can’t keep up with all the debt, many of these families are losing their cars and their homes.
We are in the middle of an economic nightmare that is absolutely unprecedented. “Redistributing the wealth” would just be like rearranging the deck chairs on the Titanic at this point. It would not fix a darn thing.
When our politicians promise that a little “change” here or a little “tweak” there will get our economy back to normal they are lying to you and most of them know it.
What we need is a comprehensive overhaul of our entire economy. Basically what we need to do is to go back to the blueprint (the U.S. Constitution) and essentially start over.
But most Americans are not ready for that. Most Americans are still enjoying the tremendous prosperity that the biggest debt binge in the history of the world has purchased for us. Most Americans still do not believe that an economic collapse is really coming.
But a massive economic collapse is coming. This whole thing is going to come crashing down and it is not going to be pretty.
We have this gem of an article today from Bloomberg:
“Headline inflation is beginning to have a greater influence on monetary policy, but not yet at the Fed,” said Crescenzi, who helps manage $1.2 trillion at Pimco in Newport Beach, California, as executive vice president. The central bank “remains anchored or hinged to the core rate,” which excludes food and energy costs.
So, Mr. Bernanke is purposely only considering ‘core’ inflation when judging the overall inflation rate. So, the soaring prices in your energy costs to drive your car and heat your house don’t count. Also not considered are your rapidly increasing food prices. I’m sure for you and I it’s no problem to forego heat and food, right? These are apparently, discretionary items to Mr. Bernanke.
The article goes on to specify what would cause Mr. Bernanke to become concerned about inflation:
“The dominant driver” of core inflation “will still be wage inflation.”
High U.S. unemployment will keep salaries in check, limiting the biggest influence on broader prices, Crescenzi said. Bernanke’s strategy of focusing monetary policy on the core rate contrasts with European Central Bank President Jean- Claude Trichet and Bank of England Governor Mervyn King. They are signaling growing discomfort with prices, prompting investors to anticipate faster interest-rate increases in the euro area and U.K.
Uh huh. Essentially, the only thing that will concern the Federal Reserve would be if wages started to rise. Yes, the one thing that might actually relieve a little of the massive financial stress the American people are experiencing would signal a serious problem to Mr. Bernake. It appears that our friends over in Europe have made loud enough objections to this insane and evil policy to cause their Central Banks to at least take note and acknowledge that price inflation in essentials is becoming alarming and concerning.
However, here in the US, this article makes it pretty clear: Ben Bernanke and the Federal Reserve think rising prices, especially in items necessary for survival are a-okay — no problem! Rising wages? Forget it. That will elicit immediate and swift action by the Federal Reserve to stop that in its tracks. They purposely want to keep your wages low and the prices of necessities going up!
Considering wages in the United States have been stagnant at best for the past decade and falling on average 30-40% over the past three years, while core inflation (you know, the necessities Bernanke doesn’t even consider) is running +8-10%, this is clearly a 50% reduction on buying-power. FIFTY PERCENT. Let that sink in.
US monetary policy is robbing you blind and destroying not just you and your family, but your family generations into the future. And why are they doing this? Same reason we’ve been talking about now for 3 years: to hide the insolvency of all the big TARP banks. You know, the same ones that are fraudulently foreclosing on millions of homes. You’d think that Americans would at least be as angry as their European counterparts by now. I guess all that protesting might conflict with American Idol.
Nonfarm business sector labor productivity increased at a 2.6 percent annual rate during the fourth quarter of 2010, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 4.5 percent in output and 1.8 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) Productivity increased 1.7 percent over the last four quarters (table A). Annual average productivity increased 3.6 percent from 2009 to 2010 (table C). Quarterly measures provide information on business cycles whereas annual measures are compared to long-term trends.
Heh, that sounds pretty decent. But is it?
I guess that depends on which side of the table you might be on – the employer or employee!
Ow my ass! Ow my ass!
Yeah. There’s no joy in that table for the employee. Gains in real hourly earnings? Where? You’re losing ground everywhere in manufacturing (gee, you think we’re still exporting all our nice manufacturing jobs to China?) while there’s no real gain of substance in non-manufacturing either.
This table just plain sucks from the employee standpoint. From the employer standpoint it’s pretty good, as the “whip the employee” game continues unabated.
Work harder and faster slave, or lose your job!
The bottom line: Workers ultimately buy the products that businesses make. Input costs (commodities) are up monstrously, and real labor compensation is flat-to-down. Exactly how are those input costs going to wind up being covered again?
The “oh it’s getting better” nonsense was amusing – and nauseating this morning over this report.
Personal income increased $54.5 billion, or 0.4 percent, and disposable personal income (DPI) increased $47.3 billion, or 0.4 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $69.5 billion, or 0.7 percent. In November, personal income increased $44.9 billion, or 0.4 percent, DPI increased $39.0 billion, or 0.3 percent and PCE increased $35.4 billion, or 0.3 percent, based on revised estimates.
This looks reasonably good, right?
Let’s keep reading:
Real disposable income increased 0.1 percent in December, compared with an increase of 0.2 percent in November. Real PCE increased 0.4 percent, compared with an increase of 0.2 percent.
In other words, we’re spending more than we make (again) and when one subtracts out inflation there is no meaningful increase at all in personal income.
That’s bad. What’s worse is how we’re getting there.
Let’s look at the raw numbers -
Disposable personal income (DPI) — personal income less personal current taxes — increased $47.3 billion.
There’s the number – $47.3 billion. What did the government borrow and spend in December - that is, how much did the government hand out that was not received in taxes?
Now you can argue all you want over the $47 billion being “good”, but in point of fact more than three times as much as borrowed and spent by the government, which went to people and, incidentally, shows up in GDP too – every dime of it.
As a result I hope you’ll excuse me if I’m less than impressed with a personal income and outlays number that reflects not only massive government support, but would be in all-on collapse were it not for that support.
Indeed, in the coming months we will see even more of it, since Obama has passed a reduction in the payroll tax which will reduce personal current taxes while not changing actual income. This will further shift “income and outlays” support over to the government’s deficit spending.
This is exactly how we got in trouble in 2007, but in that case it was private debt that finally tipped over and spilled all the marbles. Now we’re doing the same thing, but with government debt.
For how long will we get away with it?
Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe. Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here. Well, guess what? Austerity has arrived in America. At this point, it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same. Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts. Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.
Most Americans tend to think of “government debt” as only a problem of the federal government. But that is simply not accurate. The truth is that there are thousands of “government debt problems” from coast to coast. Today, state and local government debt has reached at an all-time high of 22 percent of U.S. GDP. It is a crisis of catastrophic proportions that is not going away any time soon.
A recent article in the New York Times did a good job of summarizing the financial pain that many state governments are feeling right now. Unfortunately, as bad as the budget shortfalls are for this year, they are projected to be even worse in 2012….
While state revenues — shrunken as a result of the recession — are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next year’s budgets.
So what is the solution? Well, for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures. Of course they never, ever use the term “austerity measures”, but that is exactly what they are.
The following are 22 signs that austerity has already arrived in America and that it is going to be very, very painful….
#1 The financial manager of the Detroit Public Schools, Robert Bobb, has submitted a proposal to close half of all the schools in the city. His plan envisions class sizes of up to 62 students in the remaining schools.
#2 Detroit Mayor Dave Bing wants to cut off 20 percent of the entire city from police and trash services in order to save money.
#3 Things are so tight in California that Governor Jerry Brown is requiring approximately 48,000 state workers to turn in their government-paid cell phones by June 1st.
#4 New York Governor Andrew Cuomo is proposing to completely eliminate 20 percent of state agencies.
#5 New York City Mayor Michael Bloomberg has closed 20 fire departments at night and is proposing layoffs in every single city agency.
#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in the personal income tax rate.
#7 The town of Prichard, Alabama came up with a unique way to battle their budget woes recently. They simply stopped sending out pension checks to retired workers. Of course this is a violation of state law, but town officials insist that they just do not have the money.
#8 New Jersey Governor Chris Christie recently purposely skipped a scheduled 3.1 billion dollar payment to that state’s pension system.
#9 The state of New Jersey is in such bad shape that they still are facing a $10 billion budget deficit for this year even after cutting a billion dollars from the education budget and laying off thousands of teachers.
#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently made very significant cuts to the police force. Subsequently, there has been a very substantial spike in the crime rate.
#11 The city of Camden, New Jersey is “the second most dangerous city in America”, but because of a huge budget shortfall they recently felt forced to lay off half of the city police force.
#12 Philadelphia, Baltimore and Sacramento have all instituted “rolling brownouts” during which various city fire stations are shut down on a rotating basis.
#13 In Georgia, the county of Clayton recently eliminated its entire public bus system in order to save 8 million dollars.
#14 Oakland, California Police Chief Anthony Batts has announced that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
#15 In Connecticut, the governor is asking state legislators to approve the biggest tax increase that the state has seen in two decades.
#16 All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best. Some states have backlogs of repair projects that are now over a billion dollars long. The following is a quote from a recent MSNBC article about these project backlogs….
More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York’s are at least $1 billion. Hawaii officials called park conditions “deplorable” in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.
#17 The state of Arizona recently announced that it has decided to stop paying for many types of organ transplants for people enrolled in its Medicaid program.
#18 Not only that, but Arizona is do desperate for money that they have even sold off the state capitol building, the state supreme court building and the legislative chambers.
#19 All over the nation, asphalt roads are actually being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.
#20 The state of Illinois is such a financial disaster zone that it is hard to even describe. According to 60 Minutes, the state of Illinois is six months behind on their bill payments. 60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded….
“It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state.”
#21 The city of Chicago is in such dire straits financially that officials there are actually toying with the idea of setting up a city-owned casino as a way to raise cash.
#22 Michigan Governor Rick Snyder is desperately looking for ways to cut the budget and he says that “hundreds of jurisdictions” in his state could go bankrupt over the next few years.
But everything that you have just read is only the beginning. Budget shortfalls for our state and local governments are projected to be much worse in the years ahead.
So what is the answer? Well, our state and local governments are going to have to spend less money. That means that we are likely to see even more savage budget cutting.
In addition, our state and local politicians are going to feel intense pressure to find ways to “raise revenue”. In fact, we are already starting to see this happen.
According to the National Association of State Budget Officers, over the past couple of years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort.
So hold on to your wallets, because the politicians are going to be coming after them.
We are entering a time of extreme financial stress in America. The federal government is broke. Most of our state and local governments are broke. Record numbers of Americans are going bankrupt. Record numbers of Americans are being kicked out of their homes. Record numbers of Americans are now living in poverty.
The debt-fueled prosperity of the last several decades came at a cost. We literally mortgaged the future. Now nothing will ever be the same again.