Commerce announces income and spending are down
TEXT OF INTERVIEW
JEREMY HOBSON: Now to the analysis of Julia Coronado. She’s Senior U.S. economist at BNP Paribas in New York.
Good morning.
JULIA CORONADO: Good morning.
HOBSON: First off, we just got some numbers in from the Commerce Department on personal incomes and spending. The headline is that incomes are down for the first time in more than a year, and spending has also fallen. What does that say to you in terms of the economic health of the average consumer?
CORONADO: I think it just highlights how difficult this recovery is for consumers. While we’ve got a consumer spending growth for the third quarter in the GDP report on Friday, really there’s not a lot of wage and salary growth for consumers because the labor market is weak. And they’re also starting to lose unemployment benefits. So it’s a difficult road for consumers.
HOBSON: Alright and Julia, secondly — the election tomorrow. Obviously political observers are expecting republicans to make big gains, especially in the House of Representatives. How is the business community feeling about that?
CORONADO:
Well, in general I think investors and businesses are looking towards the election — the expected outcome of the republicans taking control of the House and probably not quite the Senate. And basically getting a more divided government is viewed as a positive by investors and businesses. In fact, the fewer big initiatives that change cost structure and increase tax liabilities the better from their point of view. But the real big issues for markets this week will be the Fed meeting. It starts tomorrow, we get an announcement on Wednesday and they’re expected to announce a big expansion in monetary police which will really be the driver of markets over the next six months.
HOBSON: Julia Coronado, senior U.S. economist at BNP Paribas. Thanks so much for joining us.
CORONADO: It’s my pleasure.
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