HSBC on Income and Spending

August 29th, 2008 8:58 am | by John Jansen |

From Ian Morris of HSBC:
 

HSBC: US July Income/Consumption – Consumer Recession Alert     
* Real July spending fell 0.4% after -0.1% in June.             
* Puts Q3 real consumption on track for -1%, suggesting         
  downside risk to our forecast of -0.5%.                       
* Would make it the first quarterly decline in nearly 17 years 
  (1991Q4).                                                     
* Fiscal stimulus fading fast.  With confidence at rock bottom,
  asset deflation and rising unemployment, little hope of big   
  Q4 rebound, except for maybe recent fall in energy prices.   
* Core PCE inflation up 2.4% over the year, still too high, but
  as we pointed out in recent research (Now you see it, now you
  don’t), core inflation typically rises in hard economic       
  landings, before declining later.  Ian Morris                 

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