Institutional Sector Non-Financial and Financial Accounts for 2010 Post author By Philip Lane Post date October 20, 2011 The release is here. The data for the Non-Financial Accounts are here. The data for the Financial Accounts are here. Categories In Uncategorized 4 Comments on Institutional Sector Non-Financial and Financial Accounts for 2010 ← Income Tax Rates → Troika Statement on Conclusion of Review Mission 4 replies on “Institutional Sector Non-Financial and Financial Accounts for 2010” Is there any chance of statisticians changing houses from a Gross fixed capital formation item equal to say agricultural land improvements & new power generation to that of a durable consumer good such as cars. Household capital formation of 23 billion in 2007 !!!! A net negative activity in energy terms me thinks – now they are using their savings to pay off poor investments !!! instead of using those savings productively. 10 billion right back at you………. Our savings are caught in a banking milestone yet again when these unproductive losses should have been externalised to Bank Bond holders / risk takers. If we had a real goverment our deposits should have been taken out of the banking sector & transfered to Goverment money in 2008. Figure 2: Household Debt to Income 200% 1st link Legacy of the Gang of Four … Remember Morgan Kelly – are we heading for ‘real’ Debt/GDP of 200% Figure 2 alone should be sufficient to convict PD/FF McCreevey, Ahern, McDowell, Harney et al for years of enjoyment in De Joy – a few bankers in Portlaoise – etc etc etc ….. “Profits share of non-financial corporations The operating surplus (B.2g/B.3g) or profits of non-financial corporations (NFCs) increased from €35.2bn in 2009 to €37.8bn in 2010 (see Summary Table). The other main component of value added (B.1g) is compensation of employees (D.1 Uses) or wages and salaries which declined from €37.3bn in 2009 to €34.9bn in 2010. Therefore the improved profit share relates more to a decline in payroll costs for these corporations rather than to an increase in overall value added.” So, despite no increase in value-added, NFC companies are increasing their profits by reducing wages. What is the macroeconomic effect of this? The reduced incomes of the household sector are reducing the consumption of the household sector. But the increased incomes of the corporate sector are not leading to increased expenditure- investment. “Gross value added is largely unchanged between 2009 and 2010 while investment fell from €7.5bn to €5.8bn in the same period resulting in a fall in the investment rate between 2009 and 2010.” The effect of policy is to reduce the incomes of those who would spend it (and among households the propensity to consume is much higher among the poor). It is being transferred to those who are refusing to spend it, corporates, who refuse to invest. Some interesting points of household savings from these reports. From Charlie Weston’s related Indo article: “The figures also show that savings levels fell last year to €12.2bn, with 13.4pc of gross household income being saved, down from 14.7pc in 2009.” and “”A major use of household savings in 2010 was the repayment of loans or deleveraging, amounting to almost €10bn,” the CSO said.” http://www.independent.ie/business/personal-finance/latest-news/total-household-debt-now-twice-euro92bn-yearly-income-2913250.html This is a bit at odds with the ‘people are hording cash’ argument. Comments are closed.