Aggregator • MaxedOutMama • ID=88935 |
-2.9%, Annualized - MaxedOutMama Jun 25, 2014, 10:00 am
I was expecting something pretty bad after the last quarterly services survey, but not quite this bad.
The real source of the sudden downward revision is ACA, which sharply cut healthcare spending, and is still cutting healthcare spending. More on that later, but let's just say the earlier figures were strongly based on the idea that Americans have money to spend on health care when they don't even have money to spend on food. As a fantasy artifact, it was worthy of Walt Disney.
Somewhat transient negatives were a truly awful winter and the need to pull down inventories. Those effects have passed out of the economy, but the income effect for many households probably hasn't.
Permanent factors remain - the rise in taxes on investment (hiking capital gains tax is remarkably counterproductive), a generally anti-business environment, and the fact, as so eloquently stated by Yulva in the comments on the last post:
Most people cannot afford a home even if you gave it to them for free -It's incomes, stupid. It's cash flow. Real personal incomes ex current transfer benefits grew less than 30 billion from the previous quarter. Real disposable personal incomes (includes government benefits, subtracts taxes) grew about 43 billion. That's aggregate, so the reality is that higher needs expenses really cut into effective discretionary incomes last quarter.
Neither corporate profits nor Gross Private Domestic Investment show a strong economy. We are not really in a recession, but we are in a structurally VERY slow growth economy. From the quarter one year ago, corporate profits after taxes and when including inventory and capital consumption dropped 5.9%. Cash flow with inventory valuation adjustments fell 6.1% over four quarters.
GDI was approximately the same at -2.6%.
I will post more later, but I am not sure when due to a pretty tight schedule.
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