Woof! I Had to Double Check the Subject

The tone of the two reports is so markedly different, one might almost be forgiven for thinking they referred to separate events. I’d noticed a quick turn around in the DOW futures and, knowing they were waiting on the core-PCE deflator (Keep in mind, the first quarter GDP had been revised UP last Thursday, from 4.8% to 5.3%, with the inflation gauge remaining steady at 3.3%, “further easing anxiety over escalating prices. ” So pretty good news all around, all things considered.), thought “sheesh ~ must be okay news”. The Market Watch brief was chipper…

Both income and spending for May were up 0.4% versus expectations for increases of 0.2% and 0.4%, respectively. The core-PCE deflator, meanwhile, was up 0.2%, which was right in line with expectations. While that reading puts the year-over-year rate at 2.1%, which is above the Fed’s forecasted range, it has been viewed favorably by the market since it wasn’t worse than expected.

…and I waited for the wire reports. The first was al-Reuters ~ a sober, hyperbole free report. They even used the word ‘moderate’ and added encouraging words from the Fed’s statement yesterday.

Core U.S. consumer prices rose a moderate 0.2 percent last month, as expected, but inflation-adjusted spending advanced just 0.1 percent as high energy prices ate into disposable income, a government report showed on Friday.
…In announcing its rate hike, the Fed acknowledged inflation readings had been elevated in recent months, but said a slowing pace of economic growth should ease price pressures over time as it left its options open on future rate decisions.

Fair enough. But from the AP? Check the language ~ doom, gloom, death and disaster:

Consumer spending slowed sharply in May as rising gasoline prices left Americans with less to spend on other items, the government reported Friday.
The Commerce Department said that spending rose by just 0.4 percent last month after a 0.7 percent gain in April. Income growth also slowed to an advance of just 0.4 percent last month, reflecting weaker job growth.
Nominal consumer spending increased 0.4 percent in May, right on Wall Street forecasts and just enough to stay ahead of inflation. The scant 0.1 percent rise in inflation-adjusted spending, however, marked a slowdown from the 0.2 percent gain logged in April.
The report on personal incomes and consumer spending provided further evidence that the economy, after growing strongly in the first three months of the year, slowed sharply in the spring as Americans were battered by rising gasoline prices, higher interest rates and a cooling housing market.

Selective editing and ‘just the facts’ makes for a pretty damning report if your average Joe doesn’t know the rest. (And I guess they need to get it via mind meld, since the AP isn’t going to tell them.) A quick fisking? 5.3% growth is phenomenal but also unsustainable, so gradual ‘slowing’ is a good thing and what both the Fed and the street are looking for. Even the housing market, which has been insane, is ‘cooling’, not crashing. (Of course, when all those ARM’s come due…but that’s another story.) The ‘weaker’ employment’? The Labor Dept. reported a drop in claims of 40,000 last week and the unemployment index is at 4.6. (May job growth was weaker than expected ~ +75K ~ but still a positive number.) Many states have tax revenues streaming in well above predictions. And the final June consumer numbers say people are significantly cheerier. Could things be better? Sure they could. But they could be ~ and have been ~ a whole lot worse.
So there’s your reason for Bush not getting credit for this economy. In spite of everything nature and man could throw against it, it’s still chugging along, but who would know when the AP has us all in line at the soup kitchen?

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