From July 30 Consumer Metrics Institute report
Summary and Commentary
Our observations this month are focused on the BEA's [Bureau of Economic Analysis - US Dept. of Commerce] revisions to the historic data:
-- The revisions follow a recent annual pattern of the BEA revising historic quarterly growth rates lower. This revision removed -0.22% on average from previously reported growth rates, while the 2014 revisions removed -0.19% on average from the then previously published growth rates (and another -0.09% was removed on average in 2013).
The cumulative impact of the successive haircuts has reduced historic growth rates by an average approaching one half percent relative to "final" headline numbers -- representing an optimistic bias of about a half percent in the BEA's "final" estimates.
It is worth noting that this optimistic bias has been getting progressively worse.
-- Especially hard hit in the revisions were the real per-capita disposable income numbers. The cumulative compound annualized growth rate for real disposable income has been only +0.45% since the second quarter of 2008. And these figures represent mean incomes that are skewed by disproportionate growth at the upper end. According to Sentier Research, median incomes during the same time span have contracted by roughly 4%.
-- And household savings rates have been weaker than previously suspected, confirming the lower incomes.
A conclusion from the above? The BEA has been persistently optimistic about the "Great Recovery" while the median household has been hammered. Sadly, nothing in this report suggests that things are getting better.
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