Despite mixed economic data the major averages begin the week with decent gains. 2 more banks went to the receivers Friday Rainier Pacific Bank in Washington and Carson River Community Bank in Nevada. Construction spending slipped .6% in January the one bright spot being an increase of 1.3% in residential construction. Given the level of overbuilding that occurred during the boom construction spending will remain constrained for quite some time. Manufacturing slipped more than expectations in February as the ISM fell to 56.5, New Orders dropped to 59.5 that said the index continues to show expansion. Personal Income gained .1% in December and for 2009 increased 1.1%, consumption advanced .5% and the savings rate fell to 3.3%.
Consumption or consumer spending shows mixed results since the start of the recession, given that some 2/3’s of economic activity is attributable to consumer spending it’s not something to be ignored. The various retail sales data shows that consumer spending has held up fairly well. If one looks at state and local tax receipts the picture for consumer spending is much rosy and suggests spending has actually declined significantly. Consumer credit tells a similar story and as one would expect a roughly 10% unemployment rate also suggests that consumer spending would be reduced as well.
Once again the devil is in the details and it seems that the Census Bureau methodology leaves a lot to be desired as it doesn’t really factor in either retail bankruptcies or stores being closed both of which skew the same store sales figures higher as one would expect. As is often the case if one takes the time to look and really think about it the real trend becomes obvious.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
