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US Consumers Hunker Down: Personal Spending Misses; Savings Rate Soars To Highest Since 2012
If the US consumer is expected to carry the US economy, then something is certainly off with the US consumer... and the economy.
Moments ago the BEA reported that in October Personal Income and Spending rose at a 0.4% and 0.1% rate respectively, with the first rising as expected, but the latter missing expectations of a 0.3% increase. This was the first 2 month miss in personal spending since July 2012.
The jump in income was mostly due to a $36.8 billion increase in service-producing industry wages, which rose to $5.35 trillion, while spending failed to reflect this alleged increase in wages, which however was the result of an extensive revision to wage data going back to February.
But most notable was the dramatic revision in persona spending which the BEA engages in every year, and which in this case added tens of billions to historical disposable income, however without a mathced offset to personal spending.
As a result, what happened was that the personal savings rate soared to 5.6% in October, from 5.3% in September revised, and 4.8% unrevised, or as it was revealed last month. The dramatic decoupling in pre and post-revision savings is shown in the chart below.
And the punchline: if this data is accurate, and keep in mind the BEA has a habit of revising spending higher after it revises income, to "boost" GDP as we revealed last year, this means that the US consumer is hunkering down at an unprecedented pace, and the 5.6% savings rate is now the highest since 2012, suggesting not only are US consumer unwilling to spending much money, but are actively worried about what is coming just around the corner.
Finally, as readers may recall in what we wrote in December 2014 in "Exposing The Deception: How The US Economy "Grew" By $140 Billion As Americans Became Poorer" what the BEA did then was the opposite, and trimmed savings by almost 1%.
Well, with today's release it just reversed this fudge which we exposed last year as the primary driver for the big Q3 GDP beat: because this is how that "drop" in savings was just revised higher once again.
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Many of us know what's coming. Get your money out of the global banking system and into PM or some cash.
Paul Krugman just dropped a couple of Exlax.
If this isn't a clarion call for negative interest rates, I don't know what is. How dare the public save money. How do they even have enough money to save? This needs to be dealt with in the harshest way possible.
- Janet Yellen
if someone buys 10 ounces of gold on Monday, and 100 oz of silver on Tuesday, are they spending or saving?
Personal savings? Now that's funny.
OBAMACARETM(and all other costs incurred)
I have $5 free and clear in the bank, making me richer than 80% of peoples. I'm planning on retiring soon and living off the interest.
I have a jar of pennies. At last count I have $2.87. I need more.
LOL--I have 4 large jars of coins. My wife wanted to bring them into bank and then she remembered I want to sort thru them to see if there is any real silver coinage in the stash.
A few years back my business partner discovered Indian Casinos accumulated a lot of silver dollars. they had a deal with him to go in and sort thru those and they woudl share in the profits when he found real coins. With automation of slots thats over a few years ago.
You can use that $2.87 to buy more jars. Then you'll have a bunch of empty jars and no money. I think that's the bankster's plan.
How will you pay the service fee this month?
What is considered savings...its not a savings account at the bank.....
Whoa! The banker trolls didn't like that one! A bank is where you consolidate what is supposed to represent the value of your labor, which by government policy is continuously depreciated. It's a handy place to consolidate your wealth, so it can be conveniently pilfered by the bank (same as government). To make it easy, they've even passed laws to facilitate the process.
I call Bullshit on the savings rate rising.
I can't find anymore to cut and the Goddamned fucking BLS tells us there's no inflation. BULLSHIT! I'm so fucking disgusted i could hang a bureaucrat. BULLSHIT! Every day it's a fight to save a nickel. Oh, gas is down. Yeah whoopee!. I saved 1500 on gas this year. HEY. MY FUCKING HEALTH INSURANCE WENT UP 2200. AND that doesn't include food and clothing and maintenance costs. FUCK THE GODDAMNED GOVERNMENT AND THE GODDAMNED FUCKING FED.
Exactly right! What they are calling "hunkering down" is in reality just the consumer being out of money and borrowing power. Even some of the biggest dolts I know won't go out and add another $150/month loan payment on their already overstretched budget. It's not that they can't get a loan, it's just that they know they can't afford it.
The gov't can either find a way to get money into the hands of consumers (and blow up the currency) OR they can watch the rather rapid destruction of the economy through what I'll call a deflationary spiral for lack of a better term. In reality it's the bust of businesses that can't support their fixed overhead with reduced consumer spending which leads to their suppliers busting, employees busting, etc, etc, and down we go. This is happening all over the place where I live and I'm in one of the places that has a pretty resilient economy due to tourism (for now).
Sounds 'Robust.'
if spending is really going up that fast then a whole lot of people are going to be up shit creek in 3, 2, 1...
The political Message from Christie / Bush / Clinton / Paul Ryan: we are attacking the integrity of Social Security and Medicare....... soon.
The financial Message from the Federal Reserve: we are attacking bond and savings account yields to..... negative yield
The Obama labor Message: TTP will be importing vast amount of labor by enlarging H-1b for white collar and wages will go down not just blue collar but...... for all.
The stock market Message: stock prices are fake and only 5 guys will be in the room when Paulson gives the hypothetical solution(s)....again.
The Public Employee Message: once the election is over we are enlarging criteria for Bankruptcy for Public Entities - county, city, state and territory with Puerto Rico being the bait - the Pensions are going........ away
so unless you are deaf.......why would you spend money?
My personal spending is on food, booze and weed. Every other penny I make goes toward paying down debt. Less than $1000 remaining to pay off from $15000.
What, no hookers?
Reminds me of a joke. I've spent my money on wine, women and song.......the rest I wasted.
Wise, your move is.
Just BTFD already.
I think I'll write a letter to my congressman, telling him about my plans. I'll tell him that I no longer trust our leadership or our banking system, and I'm convinced they want to get all of us killed in a nuclear war, because every day I see unjustified provocation of Russia, who has the ability to hand us a Texas-sized ass whomping no matter what propaganda you hear on TV. The solution of course is to leave the US. I'll add that fortunately, I won't be missed. Although I've worked a lifetime, paid all my bills, and obeyed all laws, never sucked money from the public treasury that I didn't earn, my spot and other spots left empty by people like myself will be filled with your new age imports from the middle east, which I'm sure will work out great just like the model you worship in Europe. Signed, former citizen and taxpayer, silverer.
the savings rate is going up because of all these immigrants living 10 to a house are banking most of their free shit
There is no personal savings. While the Fed claims that there is no inflation to justify their zero rates, millions of Americans are being starved financially to just pay their bills. Everything coming out of this government is propaganda. They are already blaming the savings rate for a Christmas bust. Look at the Black sales events. In many cases they are blowing stuff out. This is a retail race to the bottom and it won't end well......
Must be the great returns the banks are offering? I believe nothing posted by this group, absolutely nothing and you are a fool if you believe them.
I've talked to many people about this, Obama Care has emptied many a wallet. Can't spend what you don't have - much of the disposable income has been diverted into health insurance.
Good going, Obama. You are right on track to destroy America, it is pretty obvious that is your mission.
The idea of a savings account makes me dry heave.
One of the best ways to save money is to not cooperate with that asinine "healthcare" regulation. Fuck that shit straight in the ass.
Silver at 14.18 today. Cheapset rounds I've seen are at 14.92. That's saving money right there. Stack that shit.
Thumbs up to higher personal savings and PAYING OFF DEBT. For decades now Americans have been intent on sending their 'spent' money to foreign workers and manufacturers. Over decades, they increasingly refused to support goods manufacturered in the United States. They thought buying something at a discount, rather than just a fair price, saved them money. Now the 'chickens have come home to roost.' To some extent they can no longer buy what their fellow countrymen produce - or they think that's the case. And truth be told some labor (auto workers at $72 per hour, and similar) pushed people toward this discount purchasing.
This holiday season (and from here on) we should consider buying American made goods that are not foreign made phony 'American Brands.' Consider the, perhaps, slightly higher price to be part of your charity giving - charity giving that actually makes a difference to facilitate a turnaround. Making concious efforts to refuse foreign made goods keeps money here - either in personal savings, maybe to off debt, or, when spent, simply for real employment here. All this will lessen the blow when the 'adjustment' comes.
Imagine the benefit if the American culture broadly adopted this approach.
Rarely do I engage in ad hominem attacks, especially online, but in this case?
FUCK YOU, ASSHOLE!
It's no so much the economics of buying domestic versus foriegn.
It's the fact that buying local means supporting the fucking assholes who have inflicted the likes of Obama, Pelosi, Reid on America for half a century now.
Fuck them and fuck you. That you are here trying to appear reasonable tells me it's starting to hurt, which brings a smile of thanksgiving to my face.
Kinda not getting your rant. Buying from Americans things that are made in America is a good thing, though I would admit that too often the money might go to those that support those that you mention. Hence, the self-destruction theme that I implied.
On the other hand, if the money is spent here it stays here until its spent on foreign goods (many as 'American' brands) at which point it supports non-Americans.