Interest Income

>   
>   (email exchange)
>   
>   On Thu, Jun 27, 2013 at 11:23 AM, wrote:
>   
>   From CS: Low interest rates and the interest income shortfall. Lower interest rates may
>   support the economy in the broad, but the interest income shortfall is a substantial
>   side-effect. Interest income is currently tracking $1.029 trillion at an annual rate
>   almost $400bn below the peak level of summer 2008. By comparison, wages and
>   salaries are up $539bn over the same period, and government transfer payments are
>   up $572bn.
>   

Thanks!

(and govt’s a net payer of interest)

pce, personal income yoy

Maybe it’s just me but to me this looks like it’s still decelerating, as it was before the tax hikes and spending cuts, which are still ongoing.

So I still see downside risk here?

But, of course, bad news for the economy is good news for stock prices for as long as markets think QE supports equity prices.

PCE Y/Y:


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Core PCE Y/Y:


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Personal Income Y/Y:


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Posted in GDP

stocks bonds qe dynamics

Until markets recognize QE for the tax that it actually is, the QE policy is stabilizing for stocks, destabilizing for bonds.

For example, good economic news is fundamentally good for stocks, but means QE may end, so the effects are offsetting.

Same with bad economic news. Fundamentally bad, but means QE continues, so offsetting.

Bonds are different. Good econ news is fundamentally bad for bonds and means QE may end, both negatives. And bad econ news is fundamentally good for bonds, and means QE continues, also good.