by Pam Martens and Russ Martens, Wall St On Parade:
Yesterday the Federal Open Market Committee (FOMC) of the Federal Reserve released its policy statement, which included its announcement to stand pat on interest rates at this meeting. The third sentence of this policy statement went like this: “Household spending has been growing strongly….” To use the parlance of Wall Street, the Fed was putting lipstick on a pig.
The average American might read that statement as it bounced around the newswires and conflate “household spending” with a strong consumer. Nothing could be further from the truth. Household spending data is actually capturing how Wall Street masterminds continue to fleece the 99 percent.
Just six days before the FOMC policy statement was issued, this is how USA Today reported on the strength of the consumer based on the Commerce Department’s release of retail sales data:
“U.S. retail sales slumped in August as auto and gasoline purchases fell and a core reading was unexpectedly weak, raising questions about consumer spending growth in the current quarter.
“Sales fell 0.3%, more than the 0.1% decline economists expected. A core measure — that excludes the volatile categories of autos, gasoline, building materials and food services — slipped 0.1%. Economists had forecast a 0.4% rise.”
Why is household spending going in one direction and consumer spending in another?
The Bureau of Labor Statistics (BLS), part of the U.S. Department of Labor, states that it is the “principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy.” BLS includes such expenditures as housing costs, transportation, education, personal insurance and pensions in its “household spending” data. BLS found the following in its data release for 2015:
“All major components of household spending increased in 2015… Of these, expenditures on personal insurance and pensions showed the greatest percentage increase, 10.9 percent. This was followed by education expenditures, rising 6.4 percent, transportation expenditures, rising 4.7 percent, and entertainment expenditures, rising 4.2 percent.”
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