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Further shifts of US production abroad caused the trade deficit for goods to reach the once unimaginable level of -$60.2 billion in the 30 days of June. Trade deficits in manufacturing industries are -14% worse in '04-H1 than in the same record-setting period last year. This widening deficit suggests domestic production (GDP) grew by only 2.8% in Q2, weaker even than the BEA's first 3.0% estimate.

Job growth stalls;
The July jobs report is further confirmation that the weakest economic recovery on record has stalled. The headline of only 32,000 net new jobs created in July overlooks sharp downward revisions to May and June estimates leaving the new total estimate for July jobs –29,000 LESS than previously estimated for June. The Index of Aggregate Weekly Hours worked in the private sector rose in July but remains below levels reached in May and – unprecedented – remains –0.5% BELOW levels of 32 months earlier when the economic recovery began in November, 2001. Reflecting both the unprecedented loss of jobs but the equally unprecedented shortening of the workweek during the current recovery, this important indicator is now more than –10% below average recoveries and almost –6% below even the “jobless recovery” of 1991-’93.

Incomes fall, spending plunges;
Real per capita disposable incomes declined in June to levels below those reached in April and real spending plunged to levels of last February as households reacted to declining incomes and extremely low levels of recent saving. As a result of the sharp drop in spending, personal savings recovered from just 1.2% of disposable incomes in May to 2.0% in June. These levels of personal savings remain extremely low by historical standards and with the decline in real per capita incomes raise increasingly serious questions about the strength and sustainability of the economy in the months ahead.

Growth slows further in Q2
The BEA estimate of Q2 growth rate at just 3.0% shows further, sharp slowing from revised 4.5% rate in Q1 and 5.8% in the second half of 2003. The worsening trade deficit reduced growth by -0.1% in Q2 on top of an -0.8% reduction in Q1. The global trade deficit now stands at a record -5.1% drag on GDP, more than twice the worst levels of the mid-1980s. The BEA revisions also now show household savings rate of just 1.4% in 2003, the lowest since 1934. Savings fell further in ‘04-Q1 and recovered only to 1.7% in Q2. The worsening production losses to trade and the meager household savings raise further concerns about the strength and sustainability of the current recovery.

Wages are falling;
The BLS' Employment Cost Index for June verifies that workers’ compensation and especially workers’ wages and salaries are not keeping up with prices. The seasonally adjusted Consumer Price Index (CPI-U) rose 1.2% between March and June but total compensation (including employer-paid benefits) rose by only 0.9% indicating a decline in the purchasing power of workers’ compensation of –0.3% during 2004-Q2. More importantly, workers’ wages and salaries rose by only 0.6% in Q2 indicating that the purchasing power of workers’ wages and salaries fell by –0.6% over the three months to June. Employer costs for providing health and other employee benefits rose 1.8% in Q2, 0.6% above consumer inflation. Real wages for “Professional specialty and technical” workers fell by -0.8% while salaries of “Executive, administrative and managerial” fell by -0.6% and blue collar real wages fell by -0.5% in Q2.

All from here: http://www.mbginfosvcs.com/, left column, as of today.

Those damn farmers are keeping income UP--let's kill them off, too.