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Savings Rate Plunges To Lowest In One Year As US Consumer Once Again Tapped Out

Tyler Durden's picture


Today's personal income and spending report for the month of September was just the latest datapoint confirming that the US consumer is once again massively cash-strapped and is eating, literally, into their savings. While Personal Income rose at the expected pace of 0.4%, Spending in the last month came well above expectations of 0.6%, printing at 0.8%, which meant that on a net basis Consumers, always hopeful, outspent themselves by a margin of 0.4%. This meant that the savings rate declined from 3.7% in August to a tiny 3.3% in September. This was the lowest Savings print in 2012, and higher only compared to last November's 3.2%, which in turn was the lowest print since the start of the second great depression. In other words, overeager consumers saw their nominal incomes increase... and decided to outspend said rise at double the rate of increase! At this pace, by the time Thanksgiving rolls out, US consumers will have no savings at all left to tap and living will be strictly a month to month activity.

But wait, it gets worse. As the second chart below shows, the real story was that of the Real, not Nominal, Disposable Income, adjusted for the cost of living, which declined for the second consecutive month, and shows that the peak this year took place in July, having declined consistently ever since. In other words, even real incomes are now consistently declining, spending aside.

Based on this data, the US consumer is tapped out, has hit peak earnings power, and is looking at a holiday season where spending is expected to ramp up drastically with empty bank accounts and maxed out credit cards. But at least "housing has bottomed."

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Mon, 10/29/2012 - 10:11 | 2927650 virgilcaine
virgilcaine's picture

I just transferred some "savings" to another CC.. 0%.

Mon, 10/29/2012 - 10:17 | 2927671 caimen garou
caimen garou's picture

why put money into banks that pay little intrest when I can invest in hard assests and work the farm, at least my free range chickens yield eggs and meat! got my winter garden in and got my limit of deer for the winter. life is great for people that live with in their means! 

Mon, 10/29/2012 - 10:43 | 2927751 fijisailor
fijisailor's picture

Is it considered spending down when you buy PMs and other hard assets instead of leaving your earnings with a fraudulent bank?

Mon, 10/29/2012 - 10:56 | 2927757 virgilcaine
virgilcaine's picture

When the Front Differential on the wifes MB  AWD goes it's hard to pay  for it with some veggies if u know what i mean..I'm fortunate have numerous Farms near me and purchase their produce and dairy and meat so I applaud ur efforts .  It's alot of work. 5 Generations for some here still at it, that's perserverance.

Mon, 10/29/2012 - 11:06 | 2927860 topspinslicer
topspinslicer's picture

Will inflation make it seem Christmas sales are just fine?

Mon, 10/29/2012 - 11:09 | 2927868 DosZap
DosZap's picture

Folks that buying new vehicles like crazy, are financing them for 72-84 mos......................talk about skewed & screwed headlines.

Mon, 10/29/2012 - 11:41 | 2927959 monad
monad's picture

Hayek's black market is doing fine. 

Mon, 10/29/2012 - 11:50 | 2927994 robertocarlos
robertocarlos's picture

Before you can save, you have to get out of debt. Except paying off your debt is counted as saving. Also buying gold and silver on credit is not counted as saving even though some people expect that the debt will be easily paid back, some day.

Mon, 10/29/2012 - 18:30 | 2929231 monad
monad's picture

This is BS. Just consider how they measure savinGs, as the amoUnt of moNey and value their bankSter cronies were able to locate. Obviously noone is depositing their money in the bAnk of And Its Gone. ALl that this measurEs is how much Americans diStrust, fear and hate their totalitarian police state, and we already knew this from the other indicators.

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