Stocks struggled in early trade on disappointing news and enter the final hour with modest losses. Pending Home sales fell 2.6% to 75.7 in June, another record low. This suggests sharp declines in the home sales data over the next few months, which in turn should drive inventory much higher. The Western Region fell again marking a second consecutive large annualized decline as the June figure is 14.2% lower than a year ago.
Factory Orders slipped 1.2% in June, a second consecutive large decline. The Business spending proxy, Nondefense capital goods ex. Aircraft increased .2%, but over the last 3-months its growth rate has slowed dramatically to just .7%, suggesting that the recent increase in business spending spurred by the moderation in the economic data of late is coming to a close, as the data reverses. Now one month does not make a trend, generally it is figured to be 3-months, but the data of late isn’t promising.
Personal Income was unchanged last month, wages fell.1% while the savings rate increased to 6.4%, on a year ago basis income has increased 2.6%. Consumption was also unchanged while the inflation measuring PCE Deflator slipped .1%, a second consecutive decline as the year ago rate fell to 1.4%. The savings rate has now been north of 6% for 3-consecutive months. Indicating that consumers are rapidly paying down debt as quickly as they can, Consumer Credit basically says the same thing from the demand side. Both of which are classic credit bust, this and other data over the last few years continues to show that the real problem is just plain too much debt, something most policy wonks, economists and pundits either just plain can’t understand or refuse to acknowledge despite obvious and unambiguous data. For god sakes people wouldn’t file bankruptcy and get foreclosed on in record numbers if their debts were manageable and not excessive.
The recent revision to second quarter GDP down to 2.4% and revisions to prior quarters serves to illustrate a common trend with economic data. Put out an initially very positive sounding number and then quietly revise it lower to reflect reality. JP Morgan is out with a piece hot on the heels of Friday’s GDP revision indicating that inventory adjustments will reduce the final number to just 1.7% in the second quarter. From 2007 through 2009 GDP was originally reported as +1.17% per year on average using final quarterly GDP figures. With the recent revisions an average of 1.37% was subtracted form each year’s figure leaving real GDP at a -.2% from 2007 through 2009 as per the Bureau of Economic Analysis. Something to keep in mind next time you hear that the recession is over.
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. 
