Ups and Downs, Again

Consumer spending was actually higher in July, figures from the Commerce Department showed yesterday, despite the fact that most of the other economic signals we've gotten lately have been down. The rise in consumer purchases of 0.4 percent was the biggest increase since March. At the same time, though, real disposable incomes dropped for the month.

How is that possible? Well, the inflation rate was up slightly, at 1.5 percent. So even though overall incomes were up by 0.2 percent, real disposable income was still off some.

In another sense, what's going on here is that these numbers are all so close to zero that it doesn't take much to push one into the negative while a related one remains positive. If the figures for consumer spending and real disposable income had each come in 0.5 percentage points higher - putting the rise in consumer spending at 0.9 percent and putting income up for the month by 0.3 percent - it wouldn't seem so incongruous. But since they landed on either side of zero, things seem a little off.