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Personal Savings Rate Drops To Year Lows As Expenditures Once Again Outpace Incomes
The BEA released its February Personal Income and Outlays data: continuing the trend of PI outpacing or same as Expenditures, the sequential change in February Personal Income came in at 0.0%, lower than the 0.1% consensus. On the other side, expenditures increased by 0.3%. Previous revisions indicated that January PI has been an increase of 0.3%, while PCE was greater by 0.4%. Most troubling, this implies that the Personal Savings Rate declined by 0.3% from 3.4% to 3.1%, the lowest this metric has been in over a year. Keep in mind, the primary reason why Goldman sees that 10 Year at 3.25% (as opposed to Morgan Stanley's 5.5% call) is because of the "increased" savings by US consumers. Now that these same consumers have decided to put their money in iMaxiPad pre-orders, maybe Goldman will consider reevaluating their Treasury forecast.
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Goldman Sachs - "never are we <i>accidentally</i> wrong on a prediction.
Why save when you can live 'On the Dole' in perpetuity?
"Now that these same consumers have decided to put their money in iMaxiPad pre-orders, maybe Goldman will consider reevaluating their Treasury forecast."
Brilliant! I don't know what they are but I gotta have one now Now NOW! What does it do? Do I wear it, wash with it, menstruate with it?
Doesn't matter, if Tom, Dick and Harriet are pre-ordering it, it MUST be good. The herd is never wrong, until it is. Even then, the herd will be wrong together, meaning it will be right even while it's wrong.
I was having difficulty trying to visualize what 'wearing' an IPad would look like until I remembered Mr. Flavor Flav...yeah boyyyyyyyyy!
Herd? Did someone mention herd?
maaaaaa follow the sheppard (Goldman)
Here's what I'm thinking though CD. I say let them have IPADS. I say, skip your mortgage for a couple of months so that you can modify (please consult an attorney first). Then buy yourself a honking new entertainment device one month. The next month you could buy some silver coins, rice, a new gun, and peanut butter. Then you could start up community chat meet ups on the new IPads to find new ways to tell the system to get bent, collectively. What do you say? Deal?
I think this idea has already been commandeered by the 8 million American squatters that represent the shadow housing supply.
tell-the-system-to-get-bent.com
These consumers are Great Americans, willing to give up their fiscal freedom for the good of their country. God bless the stupid, and may the vacuum of deflation not rip their lungs out through their noses
Great analogy. However, I think it is simply the fact that people have no choice.
We have Shalom Bernanke pushing up the price of gas, utilities, and all other necessities with his ZIRP policy (for which I hope, but won't hold my breath, he sees the guilotine); less people fully employed and wages in decline. This means one thing:
THE VICE GETS TIGHTER.
"Blessed are the spendthrifts, for they shall inherit the keys to the shadow inventory" Ecclesiastes from the New World Order Bible
Why retire when you can drop dead of consumption
Americans, stop living beyond your means! We need you to save, save, save!
Only, please, please, please, not quite yet.
The best the Fed can ever hope for is to make people think they are getting richer. This is of great benefit for the bankers as people are far easier to scalp in this situation...
If you are getting money back from the government in the form or tax refunds or subsidies of any sort, of course you spend it right away because saving it for the future means you will be paying higher taxes with it, especially saving it doesnt earn you any interest. So yeah basically we are consuming till we have nothing and everyone will eventually need to be bailed out.
Yep, my niece got back 5k in January and by February it was GONE! She even bought a broke down car for $850 even though she has no drivers licence because of a DUI she got 2 years ago that she still hasn't paid the fines on yet.
That's where the pick-up in spending is coming from. :-)
Spend the Paper while it still has "some" value.
Not only do you not get a recovery out of this... you get impending doom.
How can we be spending more than we're making if consumer credit is falling? Is it possible that they are simply over-estimating PCE?
Who needs a 'savings rate' when Uncle Sugar can just borrow (forever, apparently), print (also forever, apparently) and transfer the Benron Bucks straight to Joe 12-pack for eternal consumption of crap they don't need?
I'm sure that's because of "deflation"...
Behavioral economics in action boyz. When Benny boy says, spend bitches! everyone spends.
oh and btw, it's iPad Ultra with wings.
I've said it before and I'll say it again, American consumers are like goldfish, they will consume until the explode!!
Like it or not, this will continue until it can't.
It doesn't take a mathematicians to figure this out: if your income stayed the same but your expenditures went up, then you have less money available to save. It doesn't mean consumers are buying more. It means that the cost of living went up, despite what the statistics say, along with higher school and property taxes, food costs (check the size of boxes lately?), utiities, gas, and everything else you can name. The only real sales I've seen are for clothing because inventory isn't moving.
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It's pretty simple, when people are feeling good about their circumstances, they spend more. When people are worried about their futures, they save more.
http://www.financemetrics.com/personal-savings-rate-in-us/