Friday, January 31, 2014

Income Down, Spending Up?

Sometimes news happens so fast that one can hardly keep track of it.

On January 27, I read that disposable household income was down by an enormous 8%. And on January 31, I read that retails sales had increased for the first time since March 2010.

Obviously, a trend of spending increases while incomes go down is a trend which cannot go on forever. I am sure that there are good explanations for the above seeming contradiction.

In any event, I sometimes wonder how much one should make of official statistics in an economy where such a large portion is transacted in cash. 


  1. No doubt that such circumstances can only be understood by making an educated guess about all numbers not found in the official statistics.

    My uneducated guess: Official salaries have declined and clandestine labor increased with net incomes recovering?


  2. You are right to doubt all data in Greece. However, the published data do not say exactly what you reported. The decline in household incomes is attributed to decline in employee compensation and social benefits: it is not clear to me what that would mean for potential expenditure of households. It could be a straightforward correlation of lower expenditure, or it might mean nothing at all (depending on the employment situation of individual households).

    The sales figures are less ambiguous. Sales turnover has been negative y.o.y. since June 2010 and was flat for November 2013. This is not a contradiction of the household income data. What does contradict them is the clear political lie:

    "Both sales and volumes’ figures show a consistently improving trend".

    This nonsense contradicts all the data given in the article and is clearly propaganda from the newspaper or maybe from Elstat.

    So, your error is in believing the interpretation of data given by newspapers or government agencies. The raw data are not so bad for these things, even though there is a black economy. Every country has some sort of black sector, and Greece is not the worst in the EU.