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US Savings Rate Plummets To Second Lowest Since 2008 To Pay For March Spending Spree

Tyler Durden's picture




 

There was good and bad news in today's personal spending report.

First, the good: US consumers saw their personal income rise by 0.5%, or $78 billion, in March to a $14.5 trillion SAAR, driven mostly by a $32 billion increase in service wages, as well as $16 billion from government transfer receipts.

Now the bad (or, if one is a Keynesian, doubly good): personal spending more than offset the increase in income, rising by 0.9% or the most since August 2009, which rose to $12.3 trillion SAAR, driven roughly equally by an increase in spending on Goods ($53 billion) and Services ($54 billion). Curiously the increase in goods spending was the single biggest monthly increase also since August 2009. As for services, the systematic increase on spending over the past several months is unmistakable as far more money is allocated toward healthcare, that one major spending category which rescued Q1 GDP.

Goods spending:

 

Services spending, the bulk of which was for utilities and healthcare:

 

It would appear there was no "harsh weather" effect in March, even though corporations, and not to mention the Q1 GDP, can't complain fast enough about how horrible the month and the quarter both were.

End result: since spending was so much higher than income for one more month, at least according to the bean counters, the savings rate tumbled and at 3.8% (down from 4.2% in February), was the second lowest since before the Lehman failure with the only exception of January 2013 after the withholding tax rule changeover.

 

So for all those sellside economists who are praying that the March spending spree, funded mostly from savings, will continue into Q2 (because remember March is in Q1, which as we already know had an abysmal 0.1% GDP growth rate), we have one question: where will the money come from to pay for this ongoing spending spree?

 

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Thu, 05/01/2014 - 09:06 | 4715536 GetZeeGold
GetZeeGold's picture

 

 

It's hard to save money when you have a 29.5 wk/hr job.....thanks Barry!

 

If you could just raise my electricity rates at the same time......that would be super.

Thu, 05/01/2014 - 09:10 | 4715552 Headbanger
Headbanger's picture

Rising gasoline prices not high enough for ya?

Regular gas will be over $4.50 by July 4th.

Because Obama!

Thu, 05/01/2014 - 09:12 | 4715568 kaiserhoff
kaiserhoff's picture

Low saving rate?  Yes and no.

Methinks the stats are missing a few sock drawers.

Thu, 05/01/2014 - 09:31 | 4715625 aVileRat
aVileRat's picture

Yeah

And some silicon valley socialists likely are stuffing the pension plans with funny munny ESOP's and wage supression cartels which make Henry Ford / Studebaker look like a card game. Recall most productivity and savings gains have originated since 2007 from this.

http://www.businessweek.com/articles/2014-05-01/tech-hubris-the-silicon-...

25% rerates on the private tech portfolios can't be good for all those 20 somethings with 1.9x personal margins, 1.3mm condo's in the bay area and 120k salaries (graduate level skill testing question: if the rates increase from 2.45%/y to 4.28% in 1 year, wages are flat, and a 1.9x leveraged max invested savings account (saved for 4 years) corrects by 15%, at what point will your client need to declare bankruptcy? Does he have enough assets to make his 2018 tax base? if markets call 10%, 18%, 20%? )

 

Thu, 05/01/2014 - 09:44 | 4715685 g'kar
g'kar's picture

Meanwhile back at the bank:Bank manager, 27, washes up dead in Hoboken harbor a month after he went missing while training for a half-marathon

 

http://www.dailymail.co.uk/news/article-2617028/Bank-manager-27-washes-d...

Thu, 05/01/2014 - 10:28 | 4715861 Ying-Yang
Ying-Yang's picture

I personally would like to borrow $10,000,000,000 at .10% through the Fed's Discount Window for Seasonal Credit.

Seasonal credit is designed to assist small depository institutions in managing significant seasonal swings in their loans and deposits. Seasonal credit is available to depository institutions that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs.

I wonder if I can be a small depository institution?

http://www.frbdiscountwindow.org/started.cfm?genid=12&desc=Getting%20Sta...

My intra-yearly swings are really clear!

/sarc

 

Thu, 05/01/2014 - 15:34 | 4717304 MedTechEntrepreneur
MedTechEntrepreneur's picture

The savings rate will continue to tank.  The opportunity cost of Obamacare.  Before a person can even save one dime they now have to overcome the forced payment of Ocare first.  Out and out theft that will hit the 20's and 30's somethings very hard.

Thu, 05/01/2014 - 09:13 | 4715572 madcows
madcows's picture

Around $3.70 here.  Blame Osama or blame the FED or blame the rest of the world.  Cheap energy is gone.  Hope you have a commuting buddy to ride with.

Thu, 05/01/2014 - 09:30 | 4715633 Headbanger
Headbanger's picture

I have several commuting buddies.  There's Smith and his pal Wesson.  And Ruger along with Walther and his buddly HK.

Thu, 05/01/2014 - 10:20 | 4715840 Hohum
Hohum's picture

Headbanger,

Or...

Because the marginal cost of extracting oil is increasing at 10%+ per year!

Thu, 05/01/2014 - 09:29 | 4715631 dobermangang
Thu, 05/01/2014 - 09:52 | 4715709 Offthebeach
Offthebeach's picture

Yeah but with your $6,000 deductible Obamacare, $2,500 plus up side savings every year you are joblock free to write music on your no inflation IPad!

Forward!

Thu, 05/01/2014 - 10:40 | 4715901 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Just get more jobs!

Thu, 05/01/2014 - 09:06 | 4715540 Max Damage
Max Damage's picture

The bulls must be wanking themselves silly over all this shit data. Spoos 2000 here we cum

Thu, 05/01/2014 - 09:08 | 4715545 madcows
madcows's picture

Looks like they only need to drive down savings another .7% to get us back to 2007, when things we're BOOMING!

Thu, 05/01/2014 - 09:08 | 4715546 Cattender
Cattender's picture

i bought a pair of tennis shoes for 50% off yesterday..

Thu, 05/01/2014 - 09:20 | 4715594 Cattender
Cattender's picture

oh, and Bargain Gas for ONLY $3.69!!!!!!!! (goin up today for Sure!)

Thu, 05/01/2014 - 09:09 | 4715549 Cursive
Cursive's picture

The Buggles had it all wrong. It wasn't video, but inflation that killed the radio star.

Thu, 05/01/2014 - 09:10 | 4715551 Shizzmoney
Shizzmoney's picture

We live in such propserous times.  I can't contain my excitement .

/sarc

Thu, 05/01/2014 - 09:28 | 4715626 Smegley Wanxalot
Smegley Wanxalot's picture

You think that's bad ... I can't contain my excrement.

Thu, 05/01/2014 - 09:11 | 4715559 PlusTic
PlusTic's picture

they aint saving, they are borrowing on credit to spend...as usual this will end badly ;)

Thu, 05/01/2014 - 09:14 | 4715561 madcows
madcows's picture

They don't want you to save money.  They want you to BORROW money.  Borrowing is the equivalent of Growing.  You can't grow the economy when you SAVE!  Holy shit, how many times do they need to kick you in the financial balls before you realize that putting money away is a penalty.  Load up to fucking gills on debt and go to Vegas, Flip that house, buy $100 grilled cheeses, buy an over priced used SUV for $30grand.  Go into debt and GROW your FUCKING WEALTH!

Thu, 05/01/2014 - 09:29 | 4715628 pods
pods's picture

And the kicker is, if you see a problem with that, you are a freak, oddball, or nutcase.

pods

Thu, 05/01/2014 - 09:15 | 4715563 Dr. Engali
Dr. Engali's picture

Savings? WTF do I need savings for when I have Snap, Zerocare, and a Zerophone? Life is good bitchez! Now get to work slaves! I have some children to father, and when I say father I really mean I'm going to impregnate some bitch and skedaddle.

Thu, 05/01/2014 - 09:27 | 4715622 pods
pods's picture

Hit it n quit it doc!

pods

Thu, 05/01/2014 - 09:37 | 4715648 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Nigga stylez!

Thu, 05/01/2014 - 09:12 | 4715567 centerline
centerline's picture

http://research.stlouisfed.org/fred2/series/PSAVERT/

Dead cat bounce.  Downtrend still in motion.  Just coming down from the housing bubble free-for-all which rotated more cash than the previous dot com.

Thu, 05/01/2014 - 09:17 | 4715571 Ribeye
Ribeye's picture

but the slaving rate is at an all time high, 

Thu, 05/01/2014 - 09:15 | 4715577 Bill of Rights
Bill of Rights's picture

Every Ounce of Gold I buy is a savings that helps me sleep at night.

Thu, 05/01/2014 - 14:54 | 4717123 flyingpigg
flyingpigg's picture

That explains the lower savings rate in the stats!  :)

Keep on stacking!

Thu, 05/01/2014 - 09:17 | 4715582 Bill of Rights
Bill of Rights's picture

Fierce battle at the blue line

https://www.tradingview.com/x/msTrP2Nu/

Thu, 05/01/2014 - 09:20 | 4715590 ShrNfr
ShrNfr's picture

Then again, if you want to buy something to sell later, would you rather pay more, or pay less? Ag, Pt, Au are all insurance policies. I prefer to pay small premiums.

Thu, 05/01/2014 - 09:20 | 4715597 viator
viator's picture

Savings from Obamacare?

Savings from increased heating fuel costs?

Savings from increased food costs?

Savings from increased electricity costs?

Savings from higher local, state, and federal taxes?

 

 

Thu, 05/01/2014 - 09:24 | 4715614 dobermangang
dobermangang's picture

The much higher insurance deductibles under Obamacare are saving people from going to the doctors.

Thu, 05/01/2014 - 09:20 | 4715600 papaswamp
papaswamp's picture

Tax payments as well as tax refunds. Tax payments hitting the upper earner end and will cause a contraction in spending ( May?). Lions share of tax refunds have probably gone out and been/being spent now. The 'weather snapback' has shot its wad for the most part. May and June will show slow degradation as reality and now the new strain on everyone's wallet, healthcare begins to impact. Auto sales always spike at refund time...the interesting thing will be when auto loan delinquencies begin to appear.

Thu, 05/01/2014 - 09:20 | 4715601 NoWayJose
NoWayJose's picture

April spending is probably up more than income because people got their income tax returns. An income tax return is not really April 'income' since you actually had the income in 2013! it is not sustainable unless the Obamacare website computer guys move over to work on the IRS computers...

Thu, 05/01/2014 - 09:21 | 4715605 Flux
Flux's picture

I'm still kicking ass, life is good.

:)

Thu, 05/01/2014 - 09:22 | 4715607 dobermangang
dobermangang's picture

Remember folks, you have to spend to keep from going bankrupt.

http://www.youtube.com/watch?v=B9puGAMCAZU

Thu, 05/01/2014 - 09:25 | 4715617 toady
toady's picture

Is heating oil a good or a service? That bill is taking a BIG bite in March.

And March is when all the non-taxpayers get their "return". 16T this year. I hope it lasts till next March!

Thu, 05/01/2014 - 10:58 | 4715962 madcows
madcows's picture

We pre-bought 700 gallons in October.... it's already run out.  Looks like we'll be goosing the GDP with our next 6 months of heating oil purchases.  Which is a double plus good for the economy AND my personal savings rate.

Thu, 05/01/2014 - 09:31 | 4715639 Comte d'herblay
Comte d'herblay's picture

After polling the shoppers at Costco yesterday I have the answer as to why the savings rate plunged.

100% of those polled said that it was the weather. 

Thu, 05/01/2014 - 09:37 | 4715650 the not so migh...
the not so mighty maximiza's picture

OBOMACARE

Thu, 05/01/2014 - 09:50 | 4715701 Ignorance is bliss
Ignorance is bliss's picture

I encourage economic growth by spending a little on PMs every month. I am doing my patriotic duty by supporting the economy. I don't save shit. It's my God given right as an American to spend all the fiat I make.

Thu, 05/01/2014 - 09:53 | 4715713 Obama_4_Dictator
Obama_4_Dictator's picture

So, if saving in dollars doesn't protect a person from inflation and neither does saving in PM's, what should a person do??

Thu, 05/01/2014 - 09:59 | 4715748 Ignorance is bliss
Ignorance is bliss's picture

Try cocaine and scotch. You won't need savings.

Thu, 05/01/2014 - 10:06 | 4715777 Hubbs
Hubbs's picture

Spending? Saving?

I'm "spending" my money by "saving" in silver and gold, and off the books.

Thu, 05/01/2014 - 10:47 | 4715908 CaptainSpaulding
CaptainSpaulding's picture

I am so poor, I cant afford to pay attention

   - Cue Doc severinsen punch line drum tap

Thu, 05/01/2014 - 10:49 | 4715922 starman
starman's picture

my naigbor brain surgent , no joke he says this is the greatest bull market ever and things are just heating up. I told him Id hate to be he's patient.

Thu, 05/01/2014 - 13:01 | 4716636 rsnoble
rsnoble's picture

What fucking spending spree is this?  $10lb fucking hamburger and a later winter propane fillup?

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