August Savings Rate Rises As Income Outstrips Spending
The BEA has released the August Personal Spending, Income and Savings data: in summary spending rose 0.4% on expectations of 0.3%, and 0.2% previously, income increased 0.5% vs a consensus of 0.3%, and 0.2% previously again. The reason for the biggest advance in income this year, "the
resumption of extended and emergency unemployment benefits." It appears, the only way Americans can see their incomes now grow is when the goverment loosens the socialism spigot. Both the PCE core and deflator came as expected, at 0.1% and 1.5%, respectively. Finally, due to the relatively bigger growth in Income, the savings rate increased slightly from a previously revised 5.7% (5.9% before), to 5.8%. The Krugmanites out there will vomit all over this number, as the last thing, they will say, the economy needs is a consumer who is saving more just as the government's fiscal stimulus hands are tied, and the effects of the existing stimulus are now non-existent.
And an observation on wages:
Private wage and salary disbursements increased $26.1 billion in August, compared with an increase of $25.7 billion in July. Goods-producing industries' payrolls increased $6.7 billion, compared with an increase of $6.2 billion; manufacturing payrolls increased $2.9 billion, compared with an increase of $4.8 billion. Services-producing industries' payrolls increased $19.4 billion, compared with an increase of $19.5 billion.
We have yet to see if this increased wage disbursement will finally translate into actual spending with a lagging effect.