Beat the Press

Dean Baker's commentary on economic reporting

7/30/2006

Cheap Tip


Last quarter the markets were surprised by a stronger than expected number for personal consumption expenditures in March. I commented that the surprise was surprising because March personal consumption expenditures were embedded in the first quarter GDP data that had been released the prior week.

Here’s a chance to look for more surprising surprises. The consensus number for June personal consumption expenditures is an increase of 0.4 percent. My arithmetic puts the figure at over 1.0 percent. There is always the possibility of a substantial upward revision to the April and May data, but absent a large revision, June expenditures should come in much higher than “expected.” Will the markets be surprised?

43 Comments:

  • At 2:01 PM, Anonymous howard said…

    dean, assuming that your "cheap tip" is accurate, what's your analysis as to why? comp increases at the top are sufficient to drive consumer spending? continued equity extraction from homes? credit card spending? better all around household income than such numbers as median household income would lead us to expect? other?

     
  • At 2:49 PM, Anonymous Anonymous said…

    I'm not sure how reliably Personal Spending moves the market, but thanks for the tip.

    What about the other data releases at the same time,
    Personal Income and PCE deflator?

     
  • At 5:55 PM, Anonymous Anonymous said…

    I am friends with a big Wall Street investor and I asked him about the March blog. He said it was a ridiculous claim. He also sent me a graphic showing the detailed value over the course of the day which showed no unusual movement.
    Now this guy manages over a billion dollars, so I am pretty confident that he is right, and Dean Baker is wrong.

     
  • At 1:19 AM, Blogger Dean Baker said…

    Anonymous,

    I did not personally analyze market movements on the day the consumption data were released (which was in May, not March). I was referring to how it was reported in the media. The NYT cited in my original post attributed the decline in bond prices to higher than expected consumption growth. But, your friend may well be right, and the NYT piece may have gotten that part wrong.

     
  • At 9:50 AM, Anonymous Anonymous said…

    Maybe in CA, consumers paid their electric bills? Ours is up 60% over last yeat with 14% increased usage.

     
  • At 11:49 AM, Anonymous Anonymous said…

    Consensus 1, Baker 0

     
  • At 5:10 PM, Blogger Dean Baker said…

    Anonymous,

    that is right for all the consensus that predicted the upward revisions in the April and May data.

     
  • At 10:06 AM, Blogger Guy Barry said…

    How do we know this is a sure tip?How is consumer spending worked out? and what Forces drive it?
    How does it work

     
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