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Spending On Services Jumps By Most Ever As Incomes Disappoint, Savings Rate Near Five Year Lows

Tyler Durden's picture




 

Despite expectations that following several months of subpar income growth offset by rampaging spending and thus a plunging savings rate, March incomes would rise by 0.4%, while spending would be flat, this did not happen, and instead both spending and incomes rose by the same amount, or 0.2% in the past month. Worse, when adjusting for inflation, real disposable income rose just 1.1% compared to last March, and just barely above the 0% breakeven. On the other side, real spending was up 2.2% Y/Y just barely above the 2% recessionary threshold. And even that number is misleading as spending on Total Goods (including durable, already known as being quite abysmal, and non-durable), dropped by $32.8 billion in nominal dollars. What was the offset? Why a massive surge in consumption expenditures on services, which rose by $53.8 billion, which absent the spending aberation for September 11, 2001, which was reversed in the following month, was the biggest monthly increase on record! What drove this record services spending spree is anyone's guess. 

Durable Goods spending- down:

Non-Durable spending- also down:

... but Services Spending- up, up, up... Record up in fact:

Real disposable income: oops.

Finally, since both spending and income rose at the same pace, the personal savings rate was flat from February, or at 2.7%: just barely higher than the 5 year low of 2.2% posted in January. In other words consumers continue to be tapped out, and it is unclear where the income spurt will come from to drive the much needed spending surge in the coming months. Oh yes, Bernanke's trickle down magic of course. How could we forget.

And if everything else fails, the Fed, tired of monetizing debt, can just step in and start buying goods and services. After all what better way to truly goose the US economy than by outright monetizing not securities but actual inputs into the GDP equation...

Source

 

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Mon, 04/29/2013 - 09:10 | 3509585 MFLTucson
MFLTucson's picture

This is part of a comedy act, right?  Incomes down and people re buying more services?  Makes perfect sense in a world of make believe.

Mon, 04/29/2013 - 09:10 | 3509588 Bearwagon
Bearwagon's picture

"Here's to stinkin' rich!! Yea!! Stinkin' rich!!"

Mon, 04/29/2013 - 09:18 | 3509617 kliguy38
kliguy38's picture

No....here's to your masters that have been behind the curtain for your entire life making you believe there is a left/right paradigm that you ROOT for.......so go ahead and pick a side......hehheheheehe......pick it!!!.....because whether you pick curtain 1,2,or 3......its all the SAME poison......so go ahead pick your "side"...btw the "stinkin" rich are relative..... a multi millionaire to these guys is "DIRT".....a billionaire is just another dirtball.  

Mon, 04/29/2013 - 09:22 | 3509635 Zer0head
Zer0head's picture

services..

you mean like energy bills from your local utility that recently installed smart meters along with time of use price increases or could it be that monthly bank statement with its no fee checking for a paltry $25/mth - is iTunes part of services or that 3 year contract with your mobile provider

Mon, 04/29/2013 - 09:35 | 3509684 ihedgemyhedges
ihedgemyhedges's picture

Services refers to bankruptcy/divorce attorneys, short sale real estate agents, strippers, etc.......

Mon, 04/29/2013 - 09:52 | 3509731 Stoploss
Stoploss's picture

Don't forget labor services..

No one pays any attention to this but, your local electrician, plumber, HVAC, etc, per hour labor charges generally go up in lockstep with food and energy costs.

A very simple rule of thumb to detect inflation at the bottom level is to watch services labor rates.

All this is, is the reflection of the inflation manifested as higher labor costs to consumers giving the illusion that funds are being spent on services, when in fact what is happening is that the consumer is simply being ripped off.. 

Labor services rule, always have and always will.  If you want your water heater put in and brought up to code cheaper, do it yourself.

Mon, 04/29/2013 - 09:49 | 3509732 espirit
espirit's picture

Discretionary spending rose YoY? 

What koolade are the statisticians drinking?

Mon, 04/29/2013 - 10:26 | 3509825 kentfinance
kentfinance's picture

and tax returns. seasonal jumps in march?

Mon, 04/29/2013 - 10:31 | 3509838 Dapper Dan
Dapper Dan's picture

Smart Meters came first, now comes the technology to interface with meter. all part of the plan.

The installer of my smart meter told me it would save me money. 2 years later, still no savings.

 

 

Big brother to switch off your fridge: Power giants to make millions - but you must pay for 'sinister' technology
  • Computer chips will take control of home appliances when energy is low
  • Sensors will detect spikes in demand for power and when grid struggles to meet it, will temporarily shut off appliances
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Mon, 04/29/2013 - 11:08 | 3510062 Miffed Microbio...
Miffed Microbiologist's picture

Why did you let them install a smart meter?? A guy came to my house and knock on my door stating he was there to install this wonderful smart meter. I told him I didn't want it and to get the fuck of my property. He stared at me in shock and went into some long speal how wonderful it was. I repeated myself in stronger tones and pointed out he was eliminating he own job as a meter reader. This guy looked at me like I was crazy but finally left stating I was going to pay more in monthly fees by not installing it. I have solar and pay about $50/ year to San diego gas & electric so having independence is worth far more to me than their shitty fee. God, don't give them more control than they already have!

Miffed;-)

Mon, 04/29/2013 - 09:23 | 3509642 Bearwagon
Bearwagon's picture

"pick it!!!" ... Hm ... okay, I'll pick up my ball and go home ...    ;-)

(edit: By the way: the "Stinkin' rich" is a quotation from the movie "Time Bandits")

Mon, 04/29/2013 - 09:16 | 3509618 francis_sawyer
francis_sawyer's picture

So I guess the price for hookers & coke just went up...

Mon, 04/29/2013 - 10:14 | 3509779 espirit
espirit's picture

Hehe, matrix metrics - bitchez.

Mon, 04/29/2013 - 10:30 | 3509846 ihedgemyhedges
ihedgemyhedges's picture

Don't know about coke. Never touched it. But high end hooker ass is in high demand and commands a premium price. Or, so I've been told....

Mon, 04/29/2013 - 10:43 | 3509899 DosZap
DosZap's picture

Don't know about coke. Never touched it. But high end hooker ass is in high demand and commands a premium price. Or, so I've been told....

Who's got the coins to pay high end hookers?.

Never saw a woman I would pay for sex.Some hard UP morons running around.(must be the Depressed).

Mon, 04/29/2013 - 10:21 | 3509814 insanelysane
insanelysane's picture

The poor?

"Oh you must meet them. I'm sure you'll like them. Of course they haven't got two pennies to rub together but that's because they're poor."

Mon, 04/29/2013 - 09:19 | 3509621 Sudden Debt
Sudden Debt's picture

Service sector : http://www.google.nl/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&ved=0CDgQFjAA&url=http%3A%2F%2Fwww.orientalbeauty-ny.com%2F&ei=c3J-Ud_qE8i0PL3BgPgI&usg=AFQjCNGpdaHcc-2jMGpwlElWUzuESfsc6A&sig2=akwJoawkyCLdaVq822QHIg&bvm=bv.45645796,d.ZWU

looks like the asians also took over the service sector in America...

AND IT'S DURABLE BECAUSE YOUR LEFT WITH SOME NASTY SHIT FOR THE REST OF YOUR LIFE!!

Mon, 04/29/2013 - 09:22 | 3509624 TeamDepends
TeamDepends's picture

Yeah, remember 9/10/01?  Rummy Rumsfeld:  Whoopsie, there are 2.3 Trillion $ missing from the Pentagon budget....

Mon, 04/29/2013 - 09:28 | 3509660 Sudden Debt
Sudden Debt's picture

.... dude... everybody has lost at least once in his lifetime his wallet.... Rummy did it also and everybody keeps blaming him...

 

Mon, 04/29/2013 - 09:32 | 3509685 TeamDepends
TeamDepends's picture

Maybe deep in the bowels of the Pentagon they already have trillion dollar coins?  But how would you lose .3 of one?

Mon, 04/29/2013 - 12:24 | 3510359 sbenard
sbenard's picture

PEOPLE SPENT THEIR TAX REFUNDS! WHOOP-DEE-DOO!

Mon, 04/29/2013 - 09:10 | 3509586 GetZeeGold
GetZeeGold's picture

 

 

We need a strapping young socialist muslim to get us through this.

Mon, 04/29/2013 - 09:10 | 3509596 MFLTucson
MFLTucson's picture

Anyone see the jobs bill amonst the gun, gay and abortions headlines?  

Mon, 04/29/2013 - 09:21 | 3509606 GetZeeGold
GetZeeGold's picture

 

 

Not really. I think the number of poeple that actually care about jobs is only like 4%.

Mon, 04/29/2013 - 09:20 | 3509628 Sudden Debt
Sudden Debt's picture

YES!!!

THOSE GUN CONFISCATIONS BY DOOR TO DOOR RAIDS WILL CREATE JOBS!!

Mon, 04/29/2013 - 09:49 | 3509720 TeamDepends
TeamDepends's picture

Yeah, for the people who put the fun in funeral.  (Thanks Cleveland)

Mon, 04/29/2013 - 09:11 | 3509598 Baader
Baader's picture

No, your Foreign Policy is enough in this regard.

Mon, 04/29/2013 - 09:13 | 3509604 spankthebernank
spankthebernank's picture

an emaciated, nicotine addicted sociopath NWO'er you mean?

Mon, 04/29/2013 - 09:30 | 3509670 Miss Expectations
Miss Expectations's picture

What do you mean strapping...is that some sex thing?

Mon, 04/29/2013 - 10:40 | 3509882 DosZap
DosZap's picture

What do you mean strapping...is that some sex thing?

That's what Bawney Fwank gets, except he gets real meat.

Mon, 04/29/2013 - 09:10 | 3509593 vote_libertaria...
vote_libertarian_party's picture

I think the services spending surge must have been DC lobbyists getting overtime trying to get their clients off of the sequester cuts list.

Mon, 04/29/2013 - 09:21 | 3509629 francis_sawyer
francis_sawyer's picture

The sequester is a joke...

~~~

If Obama was serious about getting things under control, he'd have appointed a 'CHEESE CUTTING CZAR' by now...

Mon, 04/29/2013 - 10:26 | 3509826 insanelysane
insanelysane's picture

Still waiting for them to cut the $500b/yr in fraud and abuse in Medicare that they promised to do once Obamacare was signed those many years ago.  Any day now, I'm sure.

Mon, 04/29/2013 - 10:56 | 3509983 francis_sawyer
francis_sawyer's picture

Cheese Cutting Czar... It's the only hope... I'm surprised that idea hasn't crossed the teleprompter yet...

Mon, 04/29/2013 - 09:14 | 3509605 Yes_Questions
Yes_Questions's picture

 

 

TAX returns?

Ammo Broker Finder Fees?

Mon, 04/29/2013 - 09:15 | 3509608 Ancona
Ancona's picture

Looks like I'm not the only one who is broke-as-a-joke.

I keep watching prices go up year after year after year, while my salary remains static, or as was the case in 2009, I am asked to take a pay cut "for the good of the company". I was a good soldier and took the cut, yet have not seen a raise since then.

Recovery? What recovery?

Mon, 04/29/2013 - 10:25 | 3509818 MilleniumJane
MilleniumJane's picture

Yep, no cost of living raise for me after almost 5 years.  No recovery at all for my household.  Seems TPTB have redefined recovery as "You Have a Job.  Now Get Back to Work" or "You Have SNAP.  Now Suck It."

Mon, 04/29/2013 - 13:04 | 3510473 RKDS
RKDS's picture

Same here.  Can't even get a raise in the public sector these days.  Yet, somehow, taxes keep going up.  I fear the rich are like my first cat; they won't stop eating until they explode.

Mon, 04/29/2013 - 09:16 | 3509612 kito
kito's picture

services up?? here is the reason:

 

http://news.yahoo.com/silicon-valley-prostitution-boom-different-others-165341980.html

 

in other news, prostitution has now been heavily weighted by the govt in gdp contributing factors...............................

Mon, 04/29/2013 - 09:18 | 3509630 the not so migh...
the not so mighty maximiza's picture

they fuck for the republic

Mon, 04/29/2013 - 10:02 | 3509755 espirit
espirit's picture

Pay by the piece (ASE), or pay for the rest of your life?

Mon, 04/29/2013 - 09:32 | 3509645 Cursive
Cursive's picture

@kito

Voodoo pu-naan-ee = high grade intangibles

Mon, 04/29/2013 - 09:15 | 3509616 q99x2
q99x2's picture

A lot of people bought BitCoins.

Mon, 04/29/2013 - 09:24 | 3509644 j.tennquist
j.tennquist's picture

Yes, but do hookers accept Bitcoin?

 

Mon, 04/29/2013 - 09:25 | 3509622 Cognitive Dissonance
Cognitive Dissonance's picture

"Worse, when adjusting for inflation, real disposable income rose just 1.1% compared to last March, and just barely above the 0% breakeven."

One of the "benefits" of "official" lying about the "official" rate of inflation is that it enhances all the other "official" numbers.

#Winning

Mon, 04/29/2013 - 09:28 | 3509658 d edwards
d edwards's picture

Just wait until we get the new and improved GDP numbers in July-more bogus gov't lies.

Mon, 04/29/2013 - 09:20 | 3509627 Seasmoke
Seasmoke's picture

Public Employees are a service we do NOT need !

Mon, 04/29/2013 - 10:13 | 3509777 yogibear
yogibear's picture

Their guaranteed by the government to increase by 3%, They said so. They are adding more BS and cooking to increase the numbers and decrease the dbt to GDP ratio.

All's well so let's increase debt and blow all the money. The fed will print up Fed dollars to buy it.

 

 

Mon, 04/29/2013 - 09:20 | 3509637 ultraticum
ultraticum's picture

"The Fed can just step in and start buying goods and services . . . ".  I think they started with ammo.

Mon, 04/29/2013 - 09:35 | 3509696 Cognitive Dissonance
Cognitive Dissonance's picture

The plebs? Let them eat cake lead.

Mon, 04/29/2013 - 10:33 | 3509847 MilleniumJane
MilleniumJane's picture

Uh-huh.  Wait a minute.  I didn't catch that.  I was busy updating my Facebook page. </sarc>

Mon, 04/29/2013 - 09:21 | 3509640 Oldwood
Oldwood's picture

IS prostitution part of the service economy? It could explain a lot.

Mon, 04/29/2013 - 10:12 | 3509785 yogibear
yogibear's picture

Add more hookers to the Washington payroll.

Their expensed out now. It's a booming business in DC.

Mon, 04/29/2013 - 09:25 | 3509647 Smegley Wanxalot
Smegley Wanxalot's picture

Service spending increase = windfall for hookers

Mon, 04/29/2013 - 10:31 | 3509850 MilleniumJane
MilleniumJane's picture

The drug dealers ain't doing too bad either.

Mon, 04/29/2013 - 09:23 | 3509652 booboo
booboo's picture

The trend is up as more and more of the "yutes" hitting the street without even a rudimentary knowledge of do-it-yourselfism. Idiocracy here we come baby.

Mon, 04/29/2013 - 09:28 | 3509671 Oldwood
Oldwood's picture

You have a good point there that I hadn't really thought about before. With technology has come a huge amount of specialists and service related technologists. I would guess that those capable of doing much of anything themselves is probably at an all time low now. I am amazed at how few young guys know how to lift the hood on a car or drive a nail or actually fix or construct anything. Its like we hatched a bunch of baby birds that are relatively helpless without their Ipad.

Mon, 04/29/2013 - 09:24 | 3509654 MFLTucson
MFLTucson's picture

Finally got it.  The bankruptsy attorney's are all busy as hell!  Now it all makes sense.

Mon, 04/29/2013 - 10:46 | 3509916 MilleniumJane
MilleniumJane's picture

Ha!  I know some people who can't even afford a bankruptsy attorney.  They really should file, but instead spend all their money making the minimum payments to the bill collectors and trying to keep their heads above water.  They fell full-face into the Ponzi and now are zombie Debt Slaves.  Credit card confetti via USPS over the last 20 years has increased this population to staggering numbers.  Why they don't get together and threaten to blow up the economy by way of non-participation is beyond me.

Mon, 04/29/2013 - 09:27 | 3509655 adr
adr's picture

The service surge was primarily due to Michele's repeated calls for dildo repair with Barry out golfing with Tiger. She really likes her favorite triple action rabbit.

Mon, 04/29/2013 - 09:25 | 3509659 Smuckers
Smuckers's picture

Oh those frisky intangible itunes....
BULLISH

Mon, 04/29/2013 - 09:42 | 3509674 Mercury
Mercury's picture

What drove this record services spending spree is anyone's guess. 

When people are hard up they spend more money on certain kinds of services like laundry, fast food and other things they might otherwise do themselves. How many Hurrican Sandy victims are still getting services comped by the government I wonder? Plus, now that Wall St. is turning into the country's biggest landlord they are probably hiring a lot of lawn mowing and other maintainance services.

Mon, 04/29/2013 - 10:10 | 3509769 espirit
espirit's picture

Prolly need another $50 billion for Sandy Vics, just to see some of it "trickle down".

Another round of coke and hookers for the beaurocraps, please?

Mon, 04/29/2013 - 09:30 | 3509680 adr
adr's picture

This is all to give cover to the massive GDP adjustment higher in August. They will point to this and make the claim that GDP never accurately reflected the service economy. That the new economy relies on service much more than production, and with true weighting a GDP number in the $22-25 trillion rage is more accurate.

YAY, US debt to GDP just went way under 90%!!!! Obama can double deficits and still be in the clear. Hell the USA should get a few notch ratings upgrade!!!

Mon, 04/29/2013 - 09:33 | 3509681 Oldwood
Oldwood's picture

I know I'm feeling more "serviced" than ever. Especially after the 15th of April. It only hurts when I laugh.

Mon, 04/29/2013 - 09:33 | 3509682 madcows
madcows's picture

What kind of services?  Why, Haircuts, of course.  Lots and lots of haircuts.

These economist buffoons still don't get it.  The real world is stuck in a depression.  People are struggling to get buy.  They aren't growing/expanding the economy.  We're all just trying to tread water: at what point do we sink?  Governemnt over regulation and intrusion, taxes, debt, inflation, falling wages... in real terms, this ship is sinking.

Stick it in your ass, bernanke and congress.  You make our lives miserable.

Mon, 04/29/2013 - 09:38 | 3509695 Bearwagon
Bearwagon's picture

"The real world is stuck in a depression." That's correct, but the world isn't stuck in a bear-market, yet, and that would be all they'd care about ...

Mon, 04/29/2013 - 09:42 | 3509712 Dr. Venkman
Dr. Venkman's picture

Divorce attorneys; and that guy in a 10-gallon hat that will get you on disability.

Mon, 04/29/2013 - 09:50 | 3509721 pashley1411
pashley1411's picture

Go long drink, go long coke, go long whores.

Mon, 04/29/2013 - 09:51 | 3509728 realtick
Mon, 04/29/2013 - 09:48 | 3509725 tornado_watch
tornado_watch's picture

If we back into the personal consumption data with Friday's GDP, the services spend was dominated by 'housing services', 'housing and utilities' and 'financial services'... on the first, this is your "imputed rents" that homeowners would pay to themselves if they were to realize the economic value of their loan; on the second, higher nat gas prices likely explains the bulk; on the latter, probably more billable tax hours this year as well as higher portfolio valuations and thus fees.

 

Mon, 04/29/2013 - 09:57 | 3509740 RealityCheque
RealityCheque's picture

An army of hairdressers (and beard trimmers) marching into the fed every day. I mean, a beard trim for bernankes mighty facial fur would add at least 0.1% to GDP right?

Mon, 04/29/2013 - 09:58 | 3509742 q99x2
q99x2's picture

http://bitcoinstore.com

Basically it is Ingram Micro

But services soon to follow.

Mon, 04/29/2013 - 10:08 | 3509757 dolph9
dolph9's picture

We are never allowed from now on to have another recession in the U.S.  So the stats will be massaged.  It's "recovery" forever based upon infinite digital money.

We are also not allowed to have a country.  Nonstop immigration from every corner of the earth until we have half a billion or more people, none of whom have anything in common with one another.

I don't understand why the top Jews do this.  Are they mentally ill?  Do they not realize that if they destroy America, Israel goes down as well?

Mon, 04/29/2013 - 10:13 | 3509788 bnbdnb
bnbdnb's picture

This kind of behavior by consumers leads me to believe they have "thrown in the towel".

Mon, 04/29/2013 - 10:17 | 3509800 Tombstone
Tombstone's picture

With Benny and the central banking cabal buying bonds and stocks, too big to fail banks rigging rates and commodity prices and socialists around the world fudging statistics:  DOW 66,000 by 2020.  Buy everything.

Mon, 04/29/2013 - 10:26 | 3509824 CuriousPasserby
CuriousPasserby's picture

When I use all my spare cash, and some savings, to buy silver and gold bullion, does that count as consuming or saving?

Mon, 04/29/2013 - 11:21 | 3509845 Village Smithy
Village Smithy's picture

Neither, and that is precisely why they don't want you to buy silver and gold bullion. Buying those things is just a selfish attempt to preserve your familys' wealth. This needs to be a team effort so sell those PMs and use the cash to buy stuff at the mall. Get with the team so we can all go in for the big win! 

Wed, 05/01/2013 - 18:09 | 3519977 Herkimer Jerkimer
Herkimer Jerkimer's picture

'

'

'

What produced that sudden spike in RDIncome?

 

The tax issue at the end of the year where everybody declared their dividends?

 

Then that figure should be more thoroughly explained/delved into, as that's not the little guy, that's the rich guys. And they don't count.

 

So maybe that sudden spike is overly representational compared to the actually population?

 

What if 80% of the population didn't have any increase in the RDI?

 

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