This Just In: The Economy Still Stinks

When GDP numbers come out, the business journalism world goes into a tizzy. Front pages and homepages light up with single-digit growth figures until they're burned into our retinas.

Spending and income numbers don't inspire the same kind of pomp. Too bad: they should. Consumption consumes up to two-thirds of the economy, and income growth is the most important predictor of an incumbent party's chances in November. In other words, Spending and Income Day in America should be a fete of analysis and commentary!

So let's kick it off. Unfortunately, there's nothing to celebrate. Spending and income were both flat in June. Income and wages didn't rise for the first time since September. They fell 0.1 percent. Savings rose to a year-high (good the for long term, bad for the nascent recovery). The economy seems to be in a holding pattern. Businesses don't see enough demand to justify new jobs or higher wages. Workers are still paying off their debt. And nearly 20 percent of the country is still "broadly" unemployed: out of work, forced into part-time, or simply discouraged.

Bad times are good times to play the blame game. We blame Obama for creating an uncertain regulatory and tax environment. We blame Republicans for blocking aid to struggling states and families. We blame business for sitting on its hands and racking up record cash piles. There's enough blame to go around and not enough evidence that it should stick to any one group. The only thing we know for certain is that one part of the country is mired in finger-pointing, and the other part is mired in a no-growth/no-spending cycle. It's not a vicious cycle, yet. This isn't the Whirlpool Economy. This is the Standing Pool Economy.

Also: kids are getting "high" off of music. Welcome to Business Breakfast.

Double-Dip Watch: Spending, Income Flat in June: Consumer spending, a key driver of economic growth, was unchanged last month after growing a revised 0.1% in May, the Commerce Department said in its monthly report Tuesday. The May figure was originally reported as a 0.2% rise. [WSJ]

What Really Caused the Housing Bubble?:  Theory and data both predict that the 1.2 percentage point drop in real interest rates that American experienced between 1996 and 2006 should cause a price increase of somewhat less than 10 percent, yet prices actually rose over this period by more than 40 percent. [Economix]

Deficit Concerns Waylay State Aid Bill: Just hours before a scheduled cloture vote Monday, the Congressional Budget Office informed Senate leadership that it was still about $5 billion short of offsetting the full $26.1 billion cost of the package. [Politico]

The Auto Bailout Worked: So far, it is tough to argue that the bailout hasn't worked. GM is in the black, having reported an $865 million profit in the first quarter with black ink looking likely for the rest of the year. [BusinessWeek]

Kids Are Getting 'High' Off Music. This Is an Actual Story, in the Washington Post.

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Oh, and thanks for the pancakes, D'Arcy Norman.