Personal Savings Rate Rises To 2013 High As Consumers Defer Spending Spree
There was little of note in today's May Personal Income and Spending report (aside from the now-traditional backward looking revision of Q1 data): personal spending was expected to come increase 0.3% in May, and so it did, up from a revised 0.3% drop in April. Income, however, spurted by 0.5% in the month, more than double the expected 0.2%, up from an adjusted 0.1% increase in April. The income rise was as a result of a $24 billion increase in wages, and a $31 billion rise in income on assets (interest and dividend income). Finally $19.4 billion in personal current transfer receipts (government generosity) completed the picture of why Americans' incomes rose in May. However, despite this beat in income, spending was in line with expectations, and following the revisions of January-April data, the May 3.2% savings rate was the highest reported so far in 2013. For the Keynesians out there, this is hardly the strong indicator of consumer spending they have been looking for.