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Households Hunker Down As Saving Rate Soars To Highest Since August 2011

Tyler Durden's picture




 

Confirming that the economy continues to be on life support and that the consumer has been actively withdrawing from providing that key lifeblood so needed to regain the "virtuous circle" [RIP: XXXX-2009] is the just released revised personal consumer data, which showed even further retrenchment, as personal spending came unchanged in June on expectations of a modest 0.1% increase, while income rose 0.5% on expectations of a 0.4% increase (among other things due to "Contributions for government social insurance -- a subtraction in calculating personal income -- increased $3.5 billion in June, compared with an increase of $0.8 billion in May."). End result: the Personal Savings Rate (revised) rose from 3.6% in April, to 4.0% in May, to 4.4%, in June: the highest it has been since August 2011, just before the economy as manifested by the Fed's favorite metric, the Russell imploded. All those expecting the consumer to step up and pick up the pieces will have to defer hope and prayer for one more month. Luckily, for everything else there is the Fed's Taxpayercard.

 

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Tue, 07/31/2012 - 08:55 | 2664639 Snakeeyes
Snakeeyes's picture

Call it a Grim Fandango. Milwaukee PMI also dropped to the lowest point since July 2009.

http://confoundedinterest.wordpress.com/2012/07/31/grim-fandango-consume...

Tue, 07/31/2012 - 08:59 | 2664650 Cursive
Cursive's picture

These "savings" were already spent.  The increase in the "savings rate" is spent to pay down the burgening debt that was assumed to pull demand forward.

Tue, 07/31/2012 - 14:09 | 2665722 malek
malek's picture

Or even better a lot of these "savings" are in fact defaulted debt.

Tue, 07/31/2012 - 08:59 | 2664652 LoneStarHog
LoneStarHog's picture

The factors and computation of The Personal Savings Rate is a damn joke, just like every other so-called report.

Tue, 07/31/2012 - 09:43 | 2664820 MachoMan
MachoMan's picture

If I buy guns, gold, or grits (with a 20 year shelf life of course) and expect to hold them in perpetuity, then did I save?  If I spend to buy alternative forms of currency, does that show up in the computation?

Tue, 07/31/2012 - 13:11 | 2665507 lemonobrien
lemonobrien's picture

no, just fiat is measured.

Tue, 07/31/2012 - 10:07 | 2664895 Winston of Oceania
Winston of Oceania's picture

It is a much better guage of opportunity cost as the real market preserves capital and destroys debt. Deflation is the natural order of things regardless of what the Central Planners do. It is after all Natural Law that guides us through the cosmos and the market is just us...

Tue, 07/31/2012 - 09:00 | 2664657 devo
devo's picture

Bullish for negative interest rates.

/sarc

Tue, 07/31/2012 - 09:00 | 2664662 PaperBear
PaperBear's picture

If only these funds were put into real money – gold and silver – then this ponzi pyramid scheme would be over.

All of the dealer silver of 38.888m ounces could be acquired for $1.088 billion given it’s $28 price then where would industry and investors get the silver they want once the commercial stockpile is depleted ?

Tue, 07/31/2012 - 09:04 | 2664675 francis_sawyer
francis_sawyer's picture

Corzine...

Tue, 07/31/2012 - 09:14 | 2664702 malikai
malikai's picture

I have a similar conclusion. I guess some day people will learn that "saving" is not placing cash in the bank, but rather converting cash for real money. Nevermind. This allows those in-the-know, to actually save.

Tue, 07/31/2012 - 13:51 | 2665658 MarcusLCrassus
MarcusLCrassus's picture

Back in the '90s TPTB basically gave Warren Buffett a death threat when he tried to corner the silver market.  Whatever they said to him, it scared him so much he immediately backed off of it and sold off the silver he did have, so until someone with b4lls enough (like Eric Sprott) to do this also has the cash to buy up a few billion dollars in silver I don't see this happening.

Wed, 08/01/2012 - 06:57 | 2667994 Bobbyrib
Bobbyrib's picture

Even if someone or a group of people/fund corner the silver market, the government will make it illegal for the common man to be holding silver that is not used for the purposes of producing products.

Tue, 07/31/2012 - 09:02 | 2664668 Bob
Bob's picture

Is this an increase in real saving or an artifact of aggregate debt paydown? 

Tue, 07/31/2012 - 09:02 | 2664670 overmedicatedun...
overmedicatedundersexed's picture

go into debt big time if you can find a lender, buy PMs and promply loose them. or else have 0 debt and still buy PM's or real items..avoid any casino like the plague.

Tue, 07/31/2012 - 09:03 | 2664672 boogerbently
boogerbently's picture

YEP,

can't get enough of that two tenths of one percent interest per year. LOL

Tue, 07/31/2012 - 09:05 | 2664676 101 years and c...
101 years and counting's picture

savings = "sideline money"

BULLISH!!!

 

Tue, 07/31/2012 - 09:07 | 2664679 orangedrinkandchips
orangedrinkandchips's picture

As a child I am sure everyone heard the story of the Grasshopper and the Ant.....

 

How the ant kept working and saving all summer long while the 'hopper didnt?

 

I'm seeing a LOT of BOOMER grasshoppers sans savings! what do you do?

 

It's much like the board game of Life. You get to the end and you HAVE JACK SHIT SAVED FOR RETIREMENT AND YOU CANT WORK OR FIND A JOB!

 

rock and hard place? scary shit.

Tue, 07/31/2012 - 09:25 | 2664705 slackrabbit
slackrabbit's picture

Desperate people are like locusts. So long as they get their social secuirty check from your  ant pillaged palour, they won't give a shit what happens to you.

As the old saying goes 'democracy is like two wolves and one sheep voting what to have for dinner'. 

So be prepared to spread you savings in to mulitple safe places because mark my words they WILL vote to steal it from you.

They will eat and eat and eat till nothing is left, then they'll turn on each other.....just like the up comming currency wars.....everyone united...till they're not.

Let the feeding frenzy begin...

Tue, 07/31/2012 - 11:04 | 2665092 Bicycle Repairman
Bicycle Repairman's picture

"So long as they get their social secuirty check"

The people who get a SS check were also ants who 'saved' money with the gov't as required by law.  These ants also paid the property taxes that sent you to the gov't educational factory, so you could be turned into an ant.  The old ants didn't pay for that so you could post on the internet during working hours.  They want you to be productive and then, among a great many things, pay them back.

Tue, 07/31/2012 - 12:13 | 2665354 Totentänzerlied
Totentänzerlied's picture

LOL. They wrote the laws that did all that? News to me. They did it because they're good little fucking sheep who would never even consider rocking the boat, no matter how much suffering and damage their inaction causes. Fuck them.

Tue, 07/31/2012 - 11:23 | 2665187 viahj
viahj's picture

the whole idea of "retirement" such as retirement homes (not old folks homes but the nice, smaller single family home), vacations and travel while living off of accumulated "paper wealth" and interest is only a short lived recent phenomenon and is soon to be gone.  if you're too old to work move in with your children, raise the kids and farm the back yard.  muti-generational housing will be the norm again here in the US.  get used to it and get on it.  and instal some solar panels and rain collection devices. 

Tue, 07/31/2012 - 09:10 | 2664681 slackrabbit
slackrabbit's picture

In the end you can't make people spend. ...and where people are spending it’s on basic food items and the odd six-pack.

Certainly yours truly has been surviving ‘off and on’, on savings when not working in developing country 'hot zone'. 

Having returned from one recently, trade felt safer over there than back here in London....at least there you knew they couldn't print cigarettes or oranges….and at least I didn’t have to look at the missile stations on the roofs next door.

I think I'll keep staking cigarettes and gold.

Tue, 07/31/2012 - 09:16 | 2664706 Bob
Bob's picture

It's all about the debt and only debt from here on out.  Misleading stats like "personal saving" only cover the truth as the standard of living continues to decline.

 

Michael Hudson: The Road to Debt Deflation, Debt Peonage, and Neofeudalism

http://www.iadb.org/intal/intalcdi/PE/2012/09985.pdf

Tue, 07/31/2012 - 10:40 | 2665018 orangedrinkandchips
orangedrinkandchips's picture

Cigs.....of course...just keep em from getting stale. I dont touch em but nicotine is the strongest drug known to man....bar none.

 

Not sure if this is just me, but along the lines of people not wanting to spend or being forced to spend....much like leading a horse to water.....same thing...you cant make them spend.

Anyway, I am seeing soooo many garage sales, estate sales(which is a fact of life, tudy) but PEOPLE DONT WANT MORE SHIT FROM CHINA ANYMORE....

 

I AM NOT A HOARDER....I CANT STAND IT...I THREW OUT SO MUCH SHIT YESTERDAY, KIDS STUFF ETC....i have to have a place to live...not with piles of shit everywhere....more shit from China!

 

The tide is turning....

Tue, 07/31/2012 - 09:08 | 2664683 TrumpXVI
TrumpXVI's picture

Yup.  No more discretionary spending.  All savings into gold and silver and physical cash.  This is war.  Crash the fucking system.

Tue, 07/31/2012 - 09:14 | 2664703 Jim in MN
Jim in MN's picture

I have told my wife, 'cash only'...and I have the cash.  I give her some twenties every so often.

Tue, 07/31/2012 - 09:36 | 2664795 slackrabbit
slackrabbit's picture

We do too, for no other reason than I don't like being target marketed.

Tue, 07/31/2012 - 09:28 | 2664766 Vooter
Vooter's picture

Absolutely...

Tue, 07/31/2012 - 09:08 | 2664686 NuYawkFrankie
NuYawkFrankie's picture

Re Saving Rate Soars...

 

Translation:  Forget plain ol' pepperoni  - the average household now has  enuf for a slice of pizza with TWO toppings!

Tue, 07/31/2012 - 11:07 | 2665102 Bicycle Repairman
Bicycle Repairman's picture

Then make it pepperoni and bacon!!  LOL!

Tue, 07/31/2012 - 09:10 | 2664689 847328_3527
847328_3527's picture

Stores are emptier then I have ever seen them.  Many are hodling on by fingertips as consumers don't even window shop anymore.  The "Consumer" may actually be morphing into that detestable creature called, "Saver."

Tue, 07/31/2012 - 09:14 | 2664701 overmedicatedun...
overmedicatedundersexed's picture

fear and loathing is on the rise as one by one the" eyes wide shut "open..gestapo at airports those that awaken are agast, gov lies on employment, economic hit men in banks ..the shock could kill the patient.

Tue, 07/31/2012 - 12:47 | 2665434 Arnold Ziffel
Arnold Ziffel's picture

"Sonnenfinsternis"

Darkness at Noon (German: Sonnenfinsternis) is a novel by the Hungarian-born British novelist Arthur Koestler.

 

http://upload.wikimedia.org/wikipedia/commons/7/78/DarknessAtNoon.jpg

 

Discussed in Neil Postman's book, "Amusing Ourselves to Death."

Tue, 07/31/2012 - 09:23 | 2664740 Winston of Oceania
Winston of Oceania's picture

We must ALL decouple from the poison system of "consumerism". Plant a garden (still time even in zone 5), make your own greeting cards, start using a real cookbook and stop buying packaged foods, ANYTHING however small when added to the decoupling of your neighbors will help to crash the beast.

Tue, 07/31/2012 - 09:38 | 2664801 slackrabbit
slackrabbit's picture

Agree.

Remember when mum (grandmother) used to save the paper bags from the shopping?

Happy days are here again....

Tue, 07/31/2012 - 09:48 | 2664831 chubbar
chubbar's picture

I don't think that a person not spending because he/she has no money can be called "saving".

Tue, 07/31/2012 - 11:39 | 2665250 viahj
viahj's picture

"savers" are for when times are good. 

the "consumers" are turning into "survivioralists"

Tue, 07/31/2012 - 12:09 | 2665341 RKDS
RKDS's picture

For crying out loud...just look at the toy market if you want to get an idea as to why.  Hasbro's last round of TransFormers is 30% smaller and costs 40% more.  WTF is the point of window shopping when it works out to twice as much?  Everything I look at is smaller and crappier yet costs significantly more, on top of the fact that my pay's been frozen for 5 years.

Tue, 07/31/2012 - 12:44 | 2665432 Arnold Ziffel
Arnold Ziffel's picture

RKDS, You ain't kidd'n!

Ice cream bars are tiny...not to mention the 6 pack of tiny Snickers' Bars for $1.20 (used to be a 10-pack for 80 cents).

I am so disgusted I have begin eating healthy!

Tue, 07/31/2012 - 12:22 | 2665374 Totentänzerlied
Totentänzerlied's picture

Not 'round here. Seems like everyone is either on or just returned from their latest fabulous European or Caribbean vacation. Stores are never empty, restaurants too. The sheeple are still, as if by magic, stacking various and sundry crap. Walked in the other day and someone had bought an electric pepper mill, a laptop pad with fan, and a cupcake tote (2-dozen capacity!) --- these people have absolutely no idea what's here let alone what's coming, but they do, somehow, have plenty of FRNs to piss away and quite an urge to do so.

Tue, 07/31/2012 - 09:13 | 2664694 Jim in MN
Jim in MN's picture
US Personal Spending (Jun) M/M 0.0% vs. Exp. 0.1% (Prev. 0.0%, Rev. -0.1%)

 

Flat, flat, FLAT!!!

 

Splat.

Tue, 07/31/2012 - 09:22 | 2664730 flapdoodle
flapdoodle's picture

Not to worry! People are all saving up for their iPhone 5...

Tue, 07/31/2012 - 09:15 | 2664698 scatterbrains
scatterbrains's picture

It's interesting watching these keynesian bankster rulers trying to maintain their empire. They know that each new dose of QE is slowly poisoning themselves as the damaging effects become ever more severe upon the masses until finally they manage to o.d. and kill themselves and the system crashes.  Once the people realize what has happened they will rebuild a system opposite of the one that destroyed them. A gold based money system at some point when this chapter ends. They must be aware of this and so perhaps they will opt for deflation for a spell in order to staved off their doom.

Tue, 07/31/2012 - 10:56 | 2665063 Clowns on Acid
Clowns on Acid's picture

scatter - Exactamundo ! Let the economy go down...people screamoing for QE3 stimulus handouts just before election. Obama and DEMs provide....become the FDR type heroes.

Who will "women" vote for when the One says that he will provide for them and their children and Romney won't ?

Classic Cloward Piven tactics. Create the catastrophe, then provide the taxpayer based solution, which creates aother catastrophe and indeed another reason to provide another "solution".

It all leads to a Chavez type Gov't. The US is different however, the "people" won't accept it....until the Gov't cracks down....geez do ya think the present regime sees this coming?

Tue, 07/31/2012 - 09:26 | 2664749 Shizzmoney
Shizzmoney's picture

There's a new govt campaign out there called, "Feed the PIG".  It is meant to encourage those, especially younger people, to save.

But hopw the fuck can people save if we are in debt and our incomes are stagnant? And, no one trusts the big banks; the very ones our government says we need to prop up!  Why the fuck would anyone trust their life cash in the bank if they know whats going on?

On top of that, the mascot for the campaign is fucking creepy:

http://t2.gstatic.com/images?q=tbn:ANd9GcRbJ1OwkT67D41eE9-NHh3jlY69VKyZZ...

We can't save because we have debt to pay down; and people are delevering at a fast pace because we know another round of corporate layoffs are coming after the Stock Market takes its swoon (just a matter of time). We know "things aren't going to get better".

On top of that, those in the black are the ones truly "free"; the Constitution doesn't matter anymore; just your credit score in this "financialized" society.

The funny thing about the campaign?  Saving is really the Kryptonite to the Neo-Liberal Keynesian thoeries that everyone fawns Krugman over because saving is NOT good for "supply and demand".  David Cameron urged his people to save and pay down debt.....only to backtrack after his banking asshole backers like Barclays and the BoE said, "NOOOOOOOOOOOOOOOOOOO!!!!!".

 

Tue, 07/31/2012 - 09:30 | 2664776 phat ho
phat ho's picture

"Off with their heads"  Guillotine's on special $49.99 no refund after 50 uses.

Tue, 07/31/2012 - 09:35 | 2664793 Shizzmoney
Shizzmoney's picture

Make sure those Guillotines are made in the USA.

The reason why they passed NAFTA and other globalization pacts was so if the bankers we to be guillotines, they wouldn't have to worry because they'd be made in China and would fail.

Tue, 07/31/2012 - 09:31 | 2664781 Lucius Corneliu...
Lucius Cornelius Sulla's picture

4% is still pretty pathetic.

 

Tue, 07/31/2012 - 09:43 | 2664819 asteroids
asteroids's picture

What savings? People having been putting everything on credit cards and happy to pay the rate!

Tue, 07/31/2012 - 09:46 | 2664825 one_fell_swoop
one_fell_swoop's picture

ZH is turning into a one-trick pony with this horseshit.  Savings up = economy sucks, oh no!  Savings down = households becoming more indebted, oh no!  

It's time to pick a thesis other than "oh no!". 

Tue, 07/31/2012 - 09:56 | 2664854 Temporalist
Temporalist's picture

It's all fine in the recovery as the blmbrg title states:

Home Prices in U.S. Fell Less Than Forecast

They state it's just "another sign the US housing market is on the mend."

Better than expected...only a small decline.  No worries, the bath salts are free.

Tue, 07/31/2012 - 10:50 | 2665044 Clowns on Acid
Clowns on Acid's picture

Yeh well at least victims of ATM skimming get their $$ back, and the perp 5 years in prison.

Jon Corzine steals 1.5B, victims get 70 - 80% back, and Corzine gets to bundle for Obama !!

Any wonder why people are hunkering down ? Crime + politcal contacts = freedom and freedom from Big Media inqueries.

http://www.bankinfosecurity.com/chase-atm-skimmer-sentenced-a-4998?rf=20...

 

 

Tue, 07/31/2012 - 11:14 | 2665146 Bicycle Repairman
Bicycle Repairman's picture

If "excess savings" becomes a problem, there is a solution.  ID the savers and tax it out of them.  Then spend it for them.  This is different than print and spend.  Families with incomes over $150K could be targeted.  Investment income could be targeted.  "Fiscal cliff" dead ahead.

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