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US Savings Rate Jumps As Americans Again Spend Less, PCE Tumbles
This is not what the American Dream is made of... US consumers got a generous 0.4% rise in incomes in April - better than the 0.3% expectation - but none of it was spent! Personal Spending was unchanged - missing expectations for the 5th month of last 6. What this means is obvious, Americans are saving more (savings rate surged from 5.2% to 5.6%) and spending less... this is not the wealth effect creating 70%-of-GDP-consuming world that The Fed's textbooks say it should be...
5th miss of last 6 months in spending... despite all those low gas price tax savings..
Even as income rises...
As the savings rate surges...
Finally Personal Consumption Expenditure - amonth The Fed's favored gauges of success - dropped to its lowest since Feb 2014 and missed by the most since September 2010.
Surely spending in April was crushed due to the inclement sunshine.
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The American Dream is mostly Government Fantasy.
Yeah, the 93 million unemployed coupled with the 29.5 hr/wk job holders are all about saving money.
If they had any money they would probably spend it...but they don't have any.
...must....ban...cash....must...ban....cash....must...
Pump equities with printed money.....and pray.
No, must install negative rates AND ban cash.
all of the above
Only if you buy it as such.
But eternal low interest rates as the FED keeps rates low. And with little borrowing there is no money available to pay savers.
They will come after it and not allow it to lay unused. Bank's need borrowers, not savers. Screwed either way.
Time for a frugality tax ....
Frugality is finding a way to not pay a tax in todays tax till and beyond death world.
Pull the plug on all TV and hollywood. Hit the MF'ers in the pocketbook.
It is time to start looking at a new system. One based on Individualism and sound money. It is time to put an end to the parasites that are killing us a little bit at a time. We need to put some teeth in our constitution, demanding the death penalty for it's violation. There is no room for two diametrically ideologies. We need to come to terms with that. I could write volumes on this [I know what you guys are say; Please don't! ] Both past and recent history has demonstrated that collectivism, in what ever form, does not work. The practices of big government and feat money are wealth destroyers. I don't have to tell you guys this but it needs to be made evident.
If may be allowed to indulge in a bit of fantasy; Off with the rose color glasses and on with the revolution. No, I am not talking about senseless violence. But in my fanciful speculation of having the banksters adorning our city lamp post by well color coordinated rope would put a smile on my face.
Americans are acting very rationally. They are increasing their saving rate commensurate to the incompetence of their financial system.
The US saving rate was way too low and is only beginning to get back to where it should be.
Or, you know, the increase in income was made up bullshit or income didn't actually increase for 90% of spenders.
I'm going with made up bullshit personally.
Make interest rates negativer!!
/sarc
Pay illegal aliens for doing nothing....better!
"Americans are saving more (savings rate surged from 5.2% to 5.6%) and spending less... this is not the wealth effect creating 70%-of-GDP-consuming world that The Fed's textbooks say it should be..."
which, if you aren't Dr. Krugman or a Neo-Keynesian, it's too little, and ought to be around 8% to 12%
Who are you to say what the savings rate should be?
STFU, moron, and let the market decide.
well, yes, the US financial market seems to ask for 350 billion moar then Americans save this year... and gets them from the eurozone and China
(and who are you to pose as someone that you aren't?)
What is this MOAR crap?
Ah Mr missing E, took me a few minutes.
House...
Nothing out there worth buying, cheap Chinese tools, poisoned low nutrient quasi-food, addictive pharma complex drugs
Plenty of quality Snap-On tools to be had. Stop being such a skinflint.
What's wrong with anti depressants if they help. Prozac doesn't have many side effects for most
Are you serious?
First- Depression is a normal response to being in depressing circumstances. It's your brain's way of telling you to change what you are doing- you are on the wrong path.
Second- Nearly all mass shootings and child suicides are linked to SSRIs such as Prozac:
http://www.naturalnews.com/039752_mass_shootings_psychiatric_drugs_antid...
https://www.corbettreport.com/medicated-to-death-ssris-and-mass-killings/
https://www.occupycorporatism.com/home/zoloft-prozac-linked-child-suicid...
http://www.cchrint.org/school-shooters/
http://www.whiteoutpress.com/articles/q12013/list-of-45-mass-murders-and...
http://www.storyleak.com/flashback-virtually-mass-shootings-linked-viole...
yeah, our raises went to cover our increased health insurance costs, net effect is zero or in some cases negative
That drum beat has been quiet for a while. EBT cannot pay for insurance,
You've got to have money in the bank to make the premium payments.
I'm just educated guessing here, but cash flow in 'savings' just flows right back out to make an end of the month payment.
Some juggling there I am sure, as in money held for 48 hours is counted as savings or nonsense like that, or equity instruments bought through the bank brokerage will give you better yield than an actual savings accounts.
We know the dead ends, most do not.
I thought the equation was income - spending = savings. Mortgage isn't spending so paying off that debt is "savings". Shifting spending to healthcare from other non-savings areas nets zero, but less is spent on retail items and other consumer goods.
It's amazing how little notice this gets in the media. Front page article in the WSJ on GDP and health care spending shift wasn't addressed. Really? 1/7th of the economy and climbing and how this effects spending isn't mentioned? Why?
That may just mean personal income has only really risen for rich thieves---again. Only they have the wherewithal to save or any confidence that they can do so without fear of said savings being stolen at any time.
Exactly what you would expect to see in a deflationary collapse, rising savings rates, a rising dollar and rising bond yields, falling stock markets, falling commodities, The argument over whether it is inflation or deflation most affecting the global economy is over. The deflationary vortex is gaining momentum..
http://www.globaldeflationnews.com/inflation-vs-deflation-part-1which-on...
Time for cash for clunkers II. If we could just get more folks into 84 month 'sign and drive' car loans!
No savings required!!!
They must be counting paper returns in the equities casino, and Obamacare premiums, as "income".
I thought higher savings rates were good? Had spending gone up, Zero Hedge would be trumpeting a Profligate Americans Can't Stop Spending headline.
So which is, Zeroes - we're profligates or we're hopeless savers?
Yay, I sure wanna save more at 0%....wheeeeee!
I don't know!!! Take me back to the Valley.
Got NIRP?
It's appearing to me that this whole thing with oil prices plummeting for various reasons was nothing but absolute manipulation to crash the prices at the pump to give consumers more cash to spend - which they're not doing and now everyone seems shocked. How can you be shocked that people aren't spending 'found' money?!? You'd be shocked if you handed them the money and they kept it - not if they "found" it. Nothing the government has done has helped this economy - nothing.
They should buy a bit of physical gold.
The herd will wait until there's a big increase in the price of gold and silver. Then PM's will be 'safe' to buy. Stocks and bonds are the 'safe' buys right now.
Keep having to sell it for food, electricity, etc. Just can't seem to get ahead of the wave. I knew they would get it one way or another.
If they gave the "working poor" (middle class) a raise .... the money would get spent .... quicker than a PF (Pussy Fahrt) !
Sure on either: Sneakers, Tattoo ink or crap from McDonalds or Taco Bell. The working poor have this extreme sense of entitlement when it comes to spending on education & healthcare - only the 'rich' should pay for those things
Only the rich do.
It's a good thing these precious souls are saving more now. The banks are going to need every dollar they can get
Yet spending on housing and healthcare keeps rising as well as non-revolving debt. There seems to be a disconnect in the data somewhere. Anyone care to figure that out?
Also, what is with the massive leap in income from Q4 2013 and Q1 2014? Is there some strange revision there?
Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm -- see personal income release.
go for it. You'll be richer for the experience.
Ps it's a dead link.
http://biz.yahoo.com/c/terms/income.html
That damn ObamaCare, bleeding America dry... heh.
Raise? What raise?
The Fed observed someone finding a quarter on the sidewalk.
More savings is a good news for the USD and good news for the US long term.
For the increase in the savings rate, I blame
Early Retirement Extreme
Mr. Money Mustache
Mad Fientist
jlcollinsnh
You know, I have to tell you something...this whole "consumer" thing has seriously got to stop. I realize that will make things tough for the economy as we know it, but it really, REALLY has to happen, and soon!
My thing is second-hand buying. I'm the one who gets to deal with all those consumer goods after the buyers have tired of them. And let me tell you...there is a mind-boggling amount of STUFF out there! And not junk, or old, worn out stuff. I'm talking about never-used, still-in-the-box stuff. People buy an incredible amount of CRAP they never even USE! This is insane!
It's waste, pure and simple. And we have made so much stuff over the years that the value of that stuff has declined. We throw out devices that cost hundreds of dollars because they become obsolete within a few years. We 'impulse buy' crap off QVC, then throw it in the closet, where it sits, unused, until the next garage sale, where I pick it up for a tiny fraction of what they originally paid...why did they BUY it in the first place?
This is almost like a national mental illness. Look at that show "Hoarders"...that is US, people! We are that crazy old lady with the houseful of cats living in a decrepit house full of CRAP! And when someone finally comes to clean it out, we will scream and cry and desperately try to pull stuff out of the dumpster, until we are finally carted off to a home somewhere and heavily medicated.
But wait...a trendy company has a new smartwatch on the market that can track your whereabouts more efficiently than previous devices. That will surely get them spending.
Isn't paying down existing debt considered "Saving?" I seem to recall seeing that point made at some time, though it's almost never mentioned so I might be wrong.
If I'm correct, though, that would make a big difference in what this means. I know in my household, we never carry balances on credit cards and we've paid cash for our most recent large purchases. That, of course, makes us "deadbeats" in the world of Finance. But now that I've paid off a HELOC used for some home improvements/repairs, I'm taking that same monthly outflow and applying it to the outstanding principal on the mortgage, which is the only "debt" we have. Would that activity be considered "Savings?"
If Americans are taking what extra nickels they have and paying down existing debt, that would be 1) smart and 2) telling.