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Savings Rate Soars To Highest Since May 2009 On December Surge In Comp And Dividends Ahead Of Fiscal Cliff

Tyler Durden's picture




 

One look at the headline December data and one would get the impression that millions of Americans had started dealing meth out of some New Mexico RV, as personal income exploded by the most in 8 years, soaring some 2.6% in December to $13.936 billion. And since the surge in income, which was expected to rise some 0.8%, was hardly matched by a comparable boost to spending which missed expectations of 0.3%, rising just 0.2% - somewhat paradoxical considering the biggest boost to the otherwise negative Q4 GDP print was precisely this: spending and consumption, meant that the personal saving rate (which is merely a function of income less spending) soared to 6.5% or the highest since May 2009 - superficially an indication that consumers are hunkering down in expectation of something very bad.

Breaking Bad jokes aside, just how did the US consumer see their personal income soar as much as it did? Two things: on one hand the government's generosity, as it was "boosted by lump-sum social security benefit payments." But more importantly it was "boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates."

In other words, it was all a forward pull in comp in December to avoid the tax hikes from the January 1 Fiscal Cliff.

Sure enough, of the $352 billion increase in personal income, some $268 billion, or 76% was due to Personal Dividend Income which exploded by some 34.3% to $1.05 trillion as companies dividended income like crazy to avoid what they expected would be a huge increase in the dividend income tax.

In other words, look for personal income to plunge in January as all the forward pull effect from the Fiscal Cliff evaporates.

And what is worse, unless personal spending surges to catch up with the early income, Q1 GDP will be ugly to quite ugly.

Source: BEA

 

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Thu, 01/31/2013 - 10:00 | 3202102 Downtoolong
Downtoolong's picture

Now the MSM is trying desperately to convinced us all this money is going into the stock market. But, we all know that’s really just the cheap Fed funny money that only a chosen few have access to, either directly or indirectly.

Thu, 01/31/2013 - 12:35 | 3202733 deKevelioc
deKevelioc's picture

Blankfein just got paid.

Thu, 01/31/2013 - 10:02 | 3202103 GetZeeGold
GetZeeGold's picture

 

 

Always save for a rainy day......and it looks like rain.

Thu, 01/31/2013 - 10:08 | 3202129 EscapeKey
EscapeKey's picture

paying off debt isn't "saving".

i can't believe to the extent newspeak is in effect.

Thu, 01/31/2013 - 10:21 | 3202174 SheepDog-One
SheepDog-One's picture

Yea how do they figure 'saving'...that's anything thats not direct 'consumer credit card spending' on junk no one needs?

Thu, 01/31/2013 - 14:45 | 3203297 Positive Dennis
Positive Dennis's picture

I disagree, reduction in liabilities will result in increase in net worth. This is saving. In fact, this is obviously the first step that anyone should take.

Thu, 01/31/2013 - 10:14 | 3202146 Stoploss
Stoploss's picture

All i know is Dow has bad numbers. When Dow have badt numma's ebbody ha'a badt numma's.

Thu, 01/31/2013 - 10:13 | 3202147 duo
duo's picture

I took a 401K cash-out and had 40% deducted.  That would spike my W-2 and tax revenue for December.

Thu, 01/31/2013 - 10:14 | 3202151 CPL
CPL's picture

If in the US right now it look like the Day the World is ending.  Whacked out wind storms, Ice Tornado's, Blizzards, -20...crazy stuff.

Thu, 01/31/2013 - 10:16 | 3202153 Shell Game
Shell Game's picture

With long term food supplies going mainstream (eg. Shelf Reliance, Costco), silver Eagles being scooped up, Etc., I suspect the FRNs----->Tangibles swap diguises much of the new savings...

Thu, 01/31/2013 - 10:02 | 3202107 BandGap
BandGap's picture

Good luck with that.

-Concerned Citizen in the midst of hunkering down

Thu, 01/31/2013 - 10:04 | 3202108 mvsjcl
mvsjcl's picture

What? Did they start counting gold and silver hoarding as "savings?"

Thu, 01/31/2013 - 10:03 | 3202110 francis_sawyer
francis_sawyer's picture

It's those 'Christmas Passbook Savings Accounts' & 'March of Dimes' booklets...

Thu, 01/31/2013 - 10:59 | 3202317 smlbizman
smlbizman's picture

dont forget my green stamps...

Thu, 01/31/2013 - 10:06 | 3202114 mayhem_korner
mayhem_korner's picture

 

 

Ben just blew a gasket on this news.  The sheep are supposed to borrow their money from the future and SPEND it, not tuck it in one of our confiscatory holding pens (banks).  'Course, the pull forward of all that spending capacity puts a damper on Q1 GDP.  MUST....PRINT...MOAR!!!

Thu, 01/31/2013 - 10:21 | 3202180 DOT
DOT's picture

Don't worry the Banks will take those new deposits straight to the market.

They will even pay you interest.   WOW !

Thu, 01/31/2013 - 10:47 | 3202286 MachoMan
MachoMan's picture

Not really...  it's to be expected after the Bush era stimulus checks did the same thing...  they knew they were pushing on a string before the bailouts (theft) started in earnest (really got ramped up).

Thu, 01/31/2013 - 10:06 | 3202117 Shizzmoney
Shizzmoney's picture

Translation: Corporate Executives and Bankers took out Bonuses in December (to beat the tax hikes) that they usually would of in June.

For the 75% of America, we still have empty pockets...and souls.

On top of this, what this shows is the consumer is deleveraging and saving in preparation of another crash.  They, inside, KNOW it is coming.  However, they should be taking money OUT of the banks, not putting more in.

Thu, 01/31/2013 - 10:10 | 3202137 mayhem_korner
mayhem_korner's picture

 

 

Agree they (we?) should not be leaving money in the banks.  But are you suggeting to take it out and store it under a mattress or convert it to physical stores (PMs, ammo, & other heavenly stockpiles)?

(BTW, I would enjoy watching a good bank run.)

Thu, 01/31/2013 - 10:24 | 3202190 Shizzmoney
Shizzmoney's picture

Yes.  Only keep in the bank what you need to pay out for bills in fiat.

Buy PMs, put in vault, watch the value grow.

I don't have major capital, and I live paycheck-to-paycheck......but I do have 30 Silver toons which have grown in value since 2007.  And i expect them to save my ass (or at least buy time) when SHTF.

The most secure bank in the world BTW is the Bank of Sealy Posturpedic.

Thu, 01/31/2013 - 10:31 | 3202222 mayhem_korner
mayhem_korner's picture

 

 

SM...just a thought for an even more secure bank.  Cut out the bottom of a soup can and store your PMs in the can, in your pantry or whatever place it is you keep canned stuff.  If the rowdies come a knockin' and have any type of detection equipment at all, your Sealy will be turned over right quick.  But the 'hidden in plain sight' Campbell's soup can will not get a second look.

BTW, I've got more than a few good bottles of happy potion stocked up...I'll save one for you for when the SHTF.

Thu, 01/31/2013 - 10:16 | 3202155 bonzo112358
bonzo112358's picture

Bingo.  The problem is where to put it?  Thought about taking the money out of the bank and putting it into my brokerage account and just let it sit there.  But then what happens when there is a broker run after then next (flash) crash?  Under the mattress maybe?  Feels like that's probably about as safe as a bank would be at the moment.  Been thinking about this for sometime now and still haven't been able to come up with a solution.  Maybe buy some land in Buxton Maine and bury it next to a long rock wall under an oak.

Thu, 01/31/2013 - 10:24 | 3202185 mayhem_korner
mayhem_korner's picture

 

 

"Buxton, ME."  +1 Igor.

Next stop - Fort Hancock, Texas, please.

Thu, 01/31/2013 - 10:51 | 3202295 MachoMan
MachoMan's picture

convert it into something other than currency that isn't likely to get banned and stuff it in a safe deposit box at a bank where you know everyone...  the key to all of it is localization.

Thu, 01/31/2013 - 10:09 | 3202125 IridiumRebel
IridiumRebel's picture

RV on the outskirts of Independence MO would be better for meth sales.......

Thu, 01/31/2013 - 10:09 | 3202132 Inthemix96
Inthemix96's picture

Fuck you bernank,

You treasonous litlle arse wanker.

Thu, 01/31/2013 - 10:10 | 3202134 GubbermintWorker
GubbermintWorker's picture

Um, part of that was people pulling cash out of their IRA's ahead of the 2013 tax increases....I was one of them.

Thu, 01/31/2013 - 10:24 | 3202194 andyupnorth
andyupnorth's picture

Bingo!  Tax increases for all the little serfs!

http://www.zerohedge.com/news/2013-01-31/chart-day-spot-avoid-dividend-tax-hike-scramble

The ultra-wealthy, who are insiders and government manipulators, have already moved their wealth to the next big thing.

Thu, 01/31/2013 - 10:10 | 3202136 Dr. Engali
Dr. Engali's picture

They better dump that savings into gold.

Thu, 01/31/2013 - 10:11 | 3202140 Eireann go Brach
Eireann go Brach's picture

Or maybe the Obamas sent a check to everyone that voted for them, of course no one on ZH received a check!

Thu, 01/31/2013 - 10:15 | 3202148 Yes_Questions
Yes_Questions's picture

 

and what % of wage earners in the US did this "money" flow to?

 

Thu, 01/31/2013 - 10:27 | 3202209 DOT
DOT's picture

That would be ZERO percent of wage earners who get "money". If you are getting wages you will be paid in promises.

Ladies and Gentlemen!  The money has left the building thanks for coming to the show.

 

Thu, 01/31/2013 - 10:35 | 3202231 madcows
madcows's picture

Yep.  It was taxed at 15%... which is why Mitt and the other uber - rich pay much lower taxes than you and I.  Rick folks own significantly more stocks than Joe Main St, b/c they have the extra cash to invest.  Joe Main St has a 401(k) with a bunch of mutual funds that he can't sell w/o paying major penalties until he's pretty much old and decrepit.  Face it, the 15% tax shelter for the wealthy just disappeared, so they sold their stocks before the tax went up.  That's only hard for economists to understand.

But, here's the real question:  Why aren't the sales of stocks taxed under federal and state income tax?  Seriously, make life easier for everyone and call it all "income", and tax it under one tax.  Enough of the tax accounting nightmares, loopholes, end arounds, etc....  Call it all income, and tax it at the rate that applies. 

Thu, 01/31/2013 - 10:54 | 3202309 MachoMan
MachoMan's picture

The issue is with active (work) and passive (rent seeking) income...  we incentivize the latter and punish the former...  I believe a better balance can be struck.

Thu, 01/31/2013 - 10:15 | 3202149 Ignorance is bliss
Ignorance is bliss's picture

Martial law, followed by civil war, followed by the 4 horsemen, followed by liberty.

Thu, 01/31/2013 - 10:22 | 3202183 SheepDog-One
SheepDog-One's picture

Well, if anyone happens to actually survive I guess....the people who wrote the bible didn't know about things like Predator drones and moron DHS hit sqauds.

Thu, 01/31/2013 - 10:36 | 3202242 Ignorance is bliss
Ignorance is bliss's picture

I get a little bleak after reading the morning news. I think I'll work on my garden and clear my funk.

Thu, 01/31/2013 - 10:25 | 3202200 mayhem_korner
mayhem_korner's picture

 

 

Martial law and civil war would meet the description of the first 2 horseman, leaving the black and the pale.

Thu, 01/31/2013 - 10:18 | 3202164 khakuda
khakuda's picture

Well, let's see.  You pay me nothing on my savings and promise to debase the crap out of it for years to come.  Plus, you are going to raise my taxes over and over again a million ways till Sunday because you can't stop spending.

Sure seems like I have to save more now if I don't want to eat dirt in my old age.

Thu, 01/31/2013 - 10:23 | 3202188 SheepDog-One
SheepDog-One's picture

Old age? At this point, I'm considering it pretty lucky if I live to see another year.

Thu, 01/31/2013 - 10:29 | 3202212 Winston of Oceania
Winston of Oceania's picture

They have a plan for that too! Old age is unpatriotic Comrade so just hurry up and die.

Thu, 01/31/2013 - 10:32 | 3202224 DOT
DOT's picture

On a long enough time  line the dirt eats you.

Thu, 01/31/2013 - 10:38 | 3202249 madcows
madcows's picture

So, what would the savings rate be if we backed out the Dividend outliers?  Would the rate have gone up or down?

TD, give me one of your supergraphs overlaying inflation, income, consumer spending and savings rates.  I want to see where this bitch has been and is heading.

Thu, 01/31/2013 - 10:46 | 3202274 PoliticalRefuge...
PoliticalRefugeefromCalif.'s picture

I do expect to see a bank run in my lifetime, yeah it's a problem what to do with that 401, but leave it there and the property grabbers will eventually show up once it's proved income won't cover gvt. expenses.

Thu, 01/31/2013 - 11:38 | 3202470 disabledvet
disabledvet's picture

if the American people really start saving money ala what the Japanese do then yet again we will find the purpose of current QEternity program called into question. My understanding is that the 4Q GDP report while surprising was a "first look" subject to revision. Given that the 3Q one was revised dramatically downward we shall see just how "temporary weather events" were the cause...as opposed to "permanent money printing." a sudden and permanent rise in savings is clearly deflationary and fits the pattern (perhaps now found acceptable) of "let prices reset much, much, much lower." I did see Illinois pulled a muni bond offering just before issue...something very rare actually.

Thu, 01/31/2013 - 12:01 | 3202561 GCT
GCT's picture

Once they are done confiscating firearms they are coming to confiscate your savings.  It is just a matter of time before  the government tells the sheeple they know better then savers what to do with their money.  After all it is just sitting there in a computer some where.  When you hit 65 they will then allow you access to it in the way of vouchers, snap, and medical care.

Of course they will only allow you to have so much as you do not know how to control your spending!

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