TODAYS DATA...BULLS RUNNING RIGHT OFF A CLIFF.. 5% INFLATION...NICE!
Let's take a look inside.
Goods and service industry payrolls were both up, as were govenrment wages. But, excluding military pay increases government pay was down.
Transfer receipts went up substantially -- that is, "entitlement" spending. In fact, after rising $5.7 billion in January they were up a $9 billion last month.
PCE (spending) was up strongly. But don't get the wrong impression that this is due to better economic conditions. It's not. The personal savings rate was just 2.6% and note that the BEA's definition of "savings" includes debt repayment! As a consequence when the personal savings rate is under 5% or so it is virtually certain that people are in fact spending more than they make, and are operating in deficit. This rate is dangerously low and signals severe personal economic stress, especially when coupled with rising transfer payments.
The price index was up strongly, at 0.4%, a 4.9% annual inflation rate. Most of this was in food and energy, however, and we know you don't buy either of those. Nor does the government count them.
For the full year 2012 you spent at a rate beyond that which you earned. Congratulations; you're going broke(r).
I suppose I shouldn't be surprised by any of these figures, and in general I'm not. They portend real trouble, however, six to nine months down the road as the high-frequency data, particularly when one looks at things like baseline rail traffic, copper prices and similar, are plotted against the move in the stock market.
When objective facts don't square against herd behavior the herd is usually about to run off a cliff.