e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The U.S. Bureau of Economic Analysis (BEA) reported last week that U.S. personal income rose by just +0.1% in June after jumping by +1.8% in May. Payouts of the tax rebates played the lead role in both month-to-month changes, as the total value of issued rebate checks declined in June. “Personal current transfer receipts” fell by -1.1%in June after soaring by +10.4% in May. [This line item includes tax rebates paid to individuals with no, or very low, tax bills.] The other rebates (paid to people whose annual tax liabilities exceeded their rebates) were the reason that “personal current taxes” surged by +18.6% in June after plunging by -24.4% in May. Meanwhile, wages and salaries—usually the primary contributor to income growth—rose by just +0.2% in June following an increase of +0.3% in May. The bottom line: after rebates and taxes, disposable personal income (DPI) dropped by -1.9% in June after leaping by +5.7% in May. Without the rebates, DPI would have risen by +0.3% in June, following increases of +0.4% in May and +0.3% in April.
Consumer inflation grew even more uncomfortable in June. The BEA’s price index for personal consumption expenditures (called the PCE deflator) rose by +0.8% last month, following increases of +0.5% in May and +0.2% in April. Rising food and energy prices were the primary culprits. Compared to June 2007, the PCE deflator has increased by +4.1%, while the core PCE deflator (which excludes food and energy) was up by +2.3% over the year.
Consumer spending rose by +0.6% in June and by +0.8% in May, however, rising prices ate up much of those increases. After adjusting for inflation, real personal consumption expenditures actually fell by -0.2% in June after rising by +0.3% in May. Looking at the spending detail, consumers reduced spending for durable goods by -1.6% last month, due to lower purchases of vehicles and furniture. Spending for consumer nondurable goods also declined in June (by -0.4%), while purchases of consumer services rose (+0.2%).
Certainly, the tax rebates have been welcome, as soaring energy and food prices and falling employment have constrained consumer spending. The last (and smallest) batch of rebates was paid out in early July, bringing the three-month total to an estimated $106.7 billion. Even with all this money flooding into their bank accounts, consumers—and the economy—are not necessarily out of the woods. A number of observers expect consumer spending to relapse after the rebate-induced spending surge has ended. (Nancy D. Sidhu)
PR: http://bea.gov/newsreleases/national/pi/pinewsrelease.htm
Making sense out of airport passenger numbers is difficult, as airlines reduce service to local airports. In June, total traffic at LAX declined by -1.5% over the year, with the international segment off by -0.8%. At Ontario International, the June passenger count was down by -11.3%, with the international segment dropping by -17.8%. A spot of good news came from Palmdale Regional with a 67.7% increase over the year to June (the service has been operating for a year, we can now make year-to-year comparisons).
The Bob Hope Airport saw June passenger traffic slide by -9.5% over the year to June, while John Wayne/Orange County Airport dropped by -11.4%. Long Beach Airport, however, saw June activity rise by 3.1%. However, June traffic dropped by -8.9% at Palm Springs International.
Total air cargo tonnage declined by -6.9% over the year to June at LAX, while Ontario was down by -14.0%. The international air freight numbers were mixed in June. Total tonnage at LAX was up by 2.8% over the year, with special strength (+4.8%) in exports. At Ontario International, tonnage in June was down by -25.6%, despite a 12.2% gain in imports. (Jack Kyser)
Tuesday, August 12: Japan America Society - U.S. Subprime Crisis - Lessons From Japan's Real Estate Bubble Collapse
Panelists include David B. Green, CMB, Senior Vice President - Mortgage Division, Comerica Bank; Bradley A. Luster, President, Major Properties; and Mark Spiegel, Ph.D., Vice President, International Research & Director, Center for Pacific Basin Studies, Federal Reserve Bank of San Francisco.
Tuesday, September 16: Los Angeles NABE – What is a Recession, Anyway? with Dr. Edward Leamer, Director of UCLA Anderson Forecast.
Well renowned and respected economist Dr. Edward Leamer will share his views on our current economic situation.
Save the Date! Monday, November 17: The LAEDC 13th Annual Eddy Awards®
The Eddy Awards® is a cocktail, dinner, and awards gala to support fulfillment of the LAEDC mission to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. The Awards were introduced by the LAEDC in 1996 to celebrate individuals, organizations, and now cities that demonstrate exceptional contributions to positive economic development in the region. Confirmed honoree: Rick Caruso, developer of The Grove and the Americana.
The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.
Subscribe to e-EDGE and receive current economic news and major developments. Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.
To send us comments regarding e-EDGE, please e-mail to research@laedc.org.