The situation in the EU may be good for mortgage rates but it is bad for GDP and will likely increase the Federal deficit.

Todays jobless claims look great. GDP and home prices not so much.

Today’s stats.

Personal Income & Spending -Personal Income, Month/Month: -0.1% -Consumer Spending, Month/Month: 0.2% -Core PCE price index, Month/Month: 0.1% -Core PCE price index, Year/Year: 1.6% -These data and the graphs below are stark. With less money coming in and less money to spend the consumer cannot drive economic growth. Chicago PMI -ISM – Chicago Business Barometer [...]

Reuters/University of Michigan Consumer Sentiment -Sentiment Index: 57.8. Previous was 55.7. -Better than August, but future outlook lowest since 1980 -This survey index tries to measure consumers’ predisposition to spend. -More from Reuters and TABLE below Also I want to mention that yesterday’s united message from the central banks that they would provide liquidity to [...]

Retail Sales: July’s Advance Estimates -Month/Month change: +0.5%. -Biggest rise in 4 months -Excluding Autos Month/Month change: +0.5% -Full report Univ. of Michigan Consumer Sentiment -August Index 54.9 from 63.7 July -This is a massive drop, lowest level since May 1980 -Index averaged 89 in the five years before recession that began Dec 2007. What [...]

GDP -2Q2011 GDP at +1.3% vs. 0.4% for 1Q2010 (revised down from 1.9%) -This 1st of three readings worse than low expectations -Second revision August 26 -Full report here. -In light of fiscal and monetary policy, this report is dismal -The heart of this report is this sentence: “Real personal consumption expenditures increased 0.1 percent [...]

Consumer Sentiment -July sentiment 63.8, down from 71.5 in June -Lowest since March 2009 June Consumer Inflation -CPI Overall Month/Month: -0.2% -CPI Core (less food & energy) Month/Month: 0.3% -CPI Overall Year/Year: 3.6% -CPI Core (less food & energy) Year/Year: 1.6% -Today’s full report -Same story we already know: Core inflation is tame. -Overall gets [...]

-June Consumer Sentiment worse at 71.8 -The Thompson Reuters/University of Michigan index averaged 89 in the five years leading up to the recession that began in December 2007 -ISM June manufacturing index 55.3 vs. 53.5 in May -Improving data: above 50 indicates expanding activity -Inflation pressure moderating -More ISM survey results below

Leading Economic Indicators were +0.8%. I do not believe that LEI has been an accurate gauge of GDP as of late. It assumes that money supply increase and low interest rates will give GDP a boost. This has not been happening. Money supply and low rates are the dog’s head, but the tail (consumer spending) [...]