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Personal Income Jumps 1% In January On Government Generosity, Savings Rate At 5.8%, Highest Since August 2010
According to the BEA, personal income in January jumped by 1%, on expectations of 0.4%, while Expenditures increased a modest 0.2%, below expectations of 0.4%. The reason - government largesse finally hitting the consumer bottom line: "the January change in disposable personal income (DPI) was affected by two large special factors. Reduced employee contributions for government social insurance, which reflected provisions of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, boosted personal income in January by reducing the employee social security contribution rates (employee contributions for government social insurance are a subtraction in the calculation of personal income). The January change in DPI was affected by the expiration of the Making Work Pay provisions of the American Recovery and Reinvestment Act of 2009, which boosted personal current taxes and reduced DPI (personal current taxes are a subtraction in the calculation of DPI). Excluding these two special factors, which are discussed more fully below, DPI increased $11.4 billion, or 0.1 percent, in January, following an increase of $48.5 billion, or 0.4 percent, in December." As a result of this contraction in spending and boost in government largesse, the Savings Rate jumped to 6 month high of 5.8%: the highest since August 2010.
US Savings Rate:
More on the government's desire to fund US consumers via borrowings from the future:
Contributions for government social insurance -- a subtraction in calculating personal income -- decreased $94.9 billion in January, in contrast to an increase of $2.5 billion in December. The January decrease reflected decreases in personal contributions for government social insurance and increases in employer contributions. The January decrease in personal contributions for government social insurance reflected the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which temporarily decreased the social security contribution rate for employees and self-employed workers by 2.0 percentage points for 2011, or $105.4 billion at an annual rate. As noted above, employer contributions were boosted $7.5 billion in January by increases in the unemployment-insurance rate.
Despite a supposed boost to income, household spending increased at half the rate in December:
Personal outlays -- PCE, personal interest payments, and personal current transfer payments -- increased $22.1 billion in January, compared with an increase of $54.4 billion in December. PCE increased $23.7 billion, compared with an increase of $56.5 billion.
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someone explain to me how consumer spending increases AFTER christmas? is this S/A, or just the biggest puff of smoke blown up our asses by the overlords?
Easy when 30 million people aren't working they are making zero dollars. Have the same 30 million people get a minimum wage part time job, average it out with the amazingly rich. Bam! 1%
Have a whole household chipping in on minimum wage, part time jobs...credit cards gone, no household line of credit left/gone. People will manage to save "something"
Such simple match. Income up 1%. Saving's up 5.8 pecent.
Cost of living up 40%.
Inflation steady.....
Such a joke. But on us and real and really not that funny.
And how do they account for the thigns that really scare the PTB, shadow savings? Thus the glut of regulation on land and PM's in the US. Not good.
ORI
http://aadivaahan.wordpress.com/2011/02/27/the-fascinating-dr-chippalone/
Is there nothing rigged any more? This is getting to be a joke. I read the personal income up 1% and said to my self how the hell can that happen? Low an behold it was rigged as I suspected
The Economic Recovery gathers steam, market melt up resumes.
I think you meant "is there nothing not rigged anymore?"
Yippee! I'm rich. Time for that 2011 Maybach.
Reading SEC Form-4's, could a argument be made the 1% jump in income is due to the massive sells from insiders? Not sure if this report covers that, I'm sure someone on here does though.
Monday morning humor?
"someone explain to me how consumer spending increases AFTER christmas?"
Obuma's gift cards, didn't you get yours under the tree??
Gift card spending is counted when the card is purchased, not when it is redeemed.
just when it seems possible to short this market..seriously TD we need inside info when Ben decides Bonds must be supported ..GS and JPM traders give us ZH's a little heads up..TZA and SDS just waiting to jump.
Yeah, and they will continue waiting through another couple reverse splits at this rate.
The media will ignore the Social Security withholding decrease but will cheer tax refunds as proof that the recovery has reached the masses. If net incomes are up, spending is down and the savings rate is at the highest we've seen in months, I'd say that people are nervous and are buckling down. Seems like the same thing happened the last time oil hit $100 a barrel. Only this time we have 25,000,000 people that don't need gas for the work commute! Recovery Spring!
I think government transfer payments do nothing but prop up the slothful. Eliminate the payments to the healthy, force the recipients into the economy and you solve the illegal immigrant problem in one fell swoop.
"I'll gladly pay you Thursday for a hamburger today."
http://www.youtube.com/watch?v=jIS8vnzX3dw
I had to laugh when I read of the cut in SS withholding.
And they say they'll balance the budget in 5 years.
All trends seem to cross a zero line sometime. The big question is do we grind on slowly toward the end.
Or do we get an accident with everyone rushing to the
wrong side of the deck.
"fragrantdingleberry" Is that a euphemism for piece
of shit? You talk like you're employed. Or are you collecting
on your father's hard work?
The problem in Egypt wasn't the slothful, it was the educated with
no hope of a job. There are plenty of those here. With plenty of guns
to go around.
Actually, I'm retired and trying to preserve my capital from government confiscation. I live in the U.S. which used to be a relatively free country, but it does seem to be going the way of Egypt. Have you tried bagging groceries?
I just opend the Al Jazeera live feed on my other tab. Hillary Clinton was babbeling and using the words
"Democracy and Transparancy and Accountability", repeated them several times in a few sentences......Just a wild guess but I don't think she was talking about the Federal Reserve ......
So the tax money which would have been received for social security stays in folks pockets and what??? The missing tax dollars are now added to the deficit and we get additional borrowing (or Fed printing and Treasury borrowing to compensate, as the case may be?) How does this impact the bottom line for the US government for 2011?
That is an excellent question of how to account for the missing 2% of SS contributions.
The government said it would be "made up" by general revenues, which I assume means current revenues and debt.
So, when the government pays the missing 2%, does this have any impact on the GDP?
In addition, does additional spending from the 2% reduction by consumers increase GDP?
It looks like GDP could get a double infusion of benefits.
Don Levit