Personal Saving Rate Plunges From 5.5% To 5.0% As July Energy Expenditures Soar

Tyler Durden's picture

July personal income and expenditures were quite surprising in that while many were expecting the drop in the market to force consumer saving to upshift (lower spending than income), not only was this not true, but expenditures spiked by 1 whole percent from -0.2% to 0.8%, on expectations of 0.5%, even as Personal Income came in line with expectations of 0.3%, up from a revised 0.2% (concurrent with extensive prior data revisions). This was the biggest difference between a monthly change in income and spending since October 209. The net result was a plunge in the savings rate from 5.5% to 5.0%. And while on the surface this would be good news, as in Americans are spending again, a quick look at the PCE components indicates that virtually the entire surge is due to a spike in Energy goods and services. In other words, the entire spike in spending was to... pay for gas and associated energy expenses. Which makes sense: in June this was a drop of -4.5%, it is only logical that the subsequent jump in Brent and WTI forced American savings to drop. All in all: in July Americans continued to max out their credit cards to pay for gas. As for the income side, transfer payments as a % of spending refuse to budge: thank you Uncle Sam.

The source for the spike in PCE:

Transfer Payments:

Monthly difference between Spending and Income:

And the Savings Rate:

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Sudden Debt's picture



??'s picture

You are welcome


Obama to name Princeton's Alan Krueger to lead the (CEA) Council of Economic Advisors (replaces Goolsbee who replaced Romer) he cut his teeth the Rubin Clinton administration.

This is his seminal work on employment published in 1997


overview here

soruce document

more background here (1993)


Oh, and he was Timmay's chief economist here's a candid phot of the two

dwdollar's picture

Is this Obama's big idea for jobs?

??'s picture

from April 2010

Obama's chief economist, Christina Romer, said earlier today that while it was "the most positive jobs report we have had in three years, there will likely be bumps in the road ahead."

Alan Krueger, Geithner's chief economist, told reporters today that private-sector hiring is a "healthy sign"


Krueger was also an assistant Auto Czar

SheepDog-One's picture

Unemployment peaked, just have to use one of the FED's super slide rulers.

kridkrid's picture

I love the "endorses the choice" parade.  I remember when Geithner was announced... people lining up to proclaim it a good choice.  People know where their bread is buttered, that's for sure.

DefiantSurf's picture

I junked you just for knowing that!

fwchiro's picture

Sweet, "Peak Unemployment"!  Ahh, where's the hockeystick graph to illustrate the...  or maybe not.  At some point won't the sheeple get sick of hearing that things are getting better while they are getting the shaft?

LawsofPhysics's picture

I saw that.  Yet another academic fuckwad to "fix" things.

Caviar Emptor's picture

Yes, back in 1997 it all seemed exactly that: A Miracle. Thanx to the money printing fueled perpetual motion machine, there was little fuss or muss. The delusion of boundless wealth without sacrifice or production (eeeeek!) was in full swing and everyone, PhD's included, was partaking of the Kool Aid. And they patted themselves on the back every single day : "Goldilocks!" "Great Moderation!" "Titillatingly irrational exuberance!" 

Kayman's picture

boundless wealth without sacrifice or production

Intellectual dishonesty and academic duplicity is a growth industry.

In USA, savings = bad and economy is collapsing

In China, savings = good and economy is growing

RSloane's picture

Exactly. Why do US economists insist that Americans be under water with debt to make the economy grow?

CPL's picture

If in the tl;dr camp.


Short version is this:  Nanny state regulations and taxes strangles the ability of workplaces to hire people, comparison used is Europe versus the US.


Why the examination is pointless:  Europe and North America are hardly relevant when attempting to create employment models anymore because the largest employers is the state.  If the model were to be offered as a capitalist abstract, comparing India to Brazil would yeild something worth looking at.  Otherwise, the arguement, data and conclusions are driven by the legacy of a past empire that poorly manages it's own affairs currently.  IOW:  the entire arguement is a fictional strawman with ALOT of red herrings.

topcallingtroll's picture

Please not another princeton guy.

baby_BLYTHE's picture

"Priceton, Hardvard, Yale... bullets, bombs and banks"

andybev01's picture

What about MIT?

Do they keep this thing up to date?


IBelieveInMagic's picture

We should be thanking them for continuing to accept the dollar!

topcallingtroll's picture

They should thank us for allowing them to use it.

hedgeless_horseman's picture

Your troll-fu remains unsurpassed.

Bokkenrijder's picture

Maybe all those people are no longer saving in traditional bank accounts, but buying bullion instead?

LawsofPhysics's picture

Yes, this is the case, but it would be nice to know the numbers.  Do private gold dealers have to report sales like a bullion bank?  If so, how often?

SheepDog-One's picture

Why save in a bank at near 0%? Only keep a bit in a bank account for checking ability, other than that theres no further reason to have a bank account.

CPL's picture

That and the fact bank accounts require a credit rating.


Maybe it's a signal on bankruptcies in addition to LIBOR locking up.

pan's picture

Buy a safe at homedepot, and keep any cash in dedicated expense envelopes.  Buy PMs with the rest.

ZeroPoint's picture

Those aren't safes. Those are merely suggestions.


There is no point buying a cheap or even a median quality safe, unless it's a decoy.


Less than 14 gauge steel?  CRAP

Electronic push button entry? CRAP

No relocker? CRAP

Bolts can be tapped in with a hammer? CRAP

Less than 500 lbs?  CRAP.



pods's picture

Sorry, any safe will ever do is buy you time.  A safe is a way out of date concept.  The only reason I would use a safe is from a fire perspective.

Case in point:

Father's business was robbed.  They had a 6 foot tall, tear gas filled doors SAFE.

Air chisel got right in.  A safe will only buy you time.  Any determined thief will get into a safe.  Just a matter of time.

Easiest way to get into a safe is to hold a gun to the head of one of the offspring of the safe's owner.

Safes are pretty easy to get into when you know the combination.


DosZap's picture

pods @10:21,

Safes do exactly as intended, as a PART of your security.

An alarm system,silent, and independent from your telephone service,will get safe breakers caught 90% of the time, unless your an idiot, and do not have it anchored securely, and or so heavy they cannot move it.

I strongly suggest all 3.

pods's picture

Oh I agree Dos.  A safe will eliminate a certain part of threats, mainly low level thieves.

But a determined thief/robber will get in.  Whether that is defeating the countermeasures or simply bypassing them as I stated above.  Any an all security systems can be defeated.  You just limit the type of thief who will be able to do so.  

With things getting more violent, the chances of encountering a thief who has little value for the lives of your loved ones increases.  

One of the best systems involves a yappy dog and a Fila.

Yappy dog alerts you, and a Fila will eliminate any threat that is not armed.


Esso's picture

A $15,000.00 savings account at JP Morgan Chase will net you a cool $3.00 per year in interest.

Why, you can buy yourself a whole 12 pack of pop at Walgreen's IF they're having a good sale.

Gold & silver doesn't pay any interest, and you can't eat it (or drink it).

spanish inquisition's picture

Keep the rest safe with Tony

Edit: So the 99ers who have no benefits anymore are dipping into saving to buy gas?

CPL's picture

That's a good point.


Anyone of average smarts understands the idea of a hedge and capital preservation.

Kayman's picture

If savings are in traditional bank accounts AND the money is loaned out to investments, then that is a good thing.

Expanding the money supply and increasing deficits mean more overhead, which is negative for the economy. But good for the financial criminals and politicians, in the short run.

LawsofPhysics's picture

Energy is the only currency that matters.  TPTB know this and they know that the percieved cost of energy by the sheep could easily break the current social structure.  Interesting times indeed.  Wage parity with the world may not be as far away as most think.  Local economies will cetainly benefit as the cost of refined liquid fuel increases, so I guess that is a good thing.  Any predictions on how long it will be until states with abundant natural resources tell the rest of the American states to piss off?

SheepDog-One's picture

Got to keep the Spice flowing.

kridkrid's picture

What kinds of things would have to happen first?  The US would need to break apart, would it not?  "We" would repudiate foreign debt, dissolve the union, end the dollar (all good things, from where I sit).  I think the opposite happens, however; Consolidation of countries and consolidation of currencies.

LawsofPhysics's picture

Bullshit, nothing has to "happen".  If a state with natural resources has an immediate need to use those resources (say a natural disaster or social unrest) then those resources simply will not flow out of the state.  What are the other states or any federal agencies really going to do?  The U.S. is already a volunteer military.  One that is stretched thin and, quite frankly, tired on many levels.  But I think we agree - all good things at the end of the day.  You know what they say in the RE business - location, location, location.  

Remember, in a healthy economy posession is still nine tenths of the law. During a crisis, it is the law.

kridkrid's picture

but that state doesn't really control those natural resources, does it?  I mean don't those natural resources simply go out to the market sold to the highest bidder?  Say, for example, that Texas wants to stop the flow (using the other poster's metaphor) doesn't Texas almost need to declare independence and "nationalize" their natural resources?  Which was the point of my post... lots of things need to happen first, I think.

LawsofPhysics's picture

Unless these international energy companies are using robots to mine and recover those resources (which admittedly some of them are) then they are employing people in those sates.  The people living there will have the untimate say - especially in Texas where many also serve in the National Guard.  Again, let me qualify the statement by saying nothing "official" or "announced" has to happen.  These resources will simply start going unaccounted for.  Ever hear of the old saying "fell off the truck".  Lots of things fell off the truck during the depression and the rescession of the 70's.  People are people, I expect nothing less.

CPL's picture

What does 5.5% to 5.0% count as in terms of capital?  If in the trillions I think we'll be looking at LIBOR going into lockjaw mode.  Although the rules keep changing on the capitalization requirements for banks and fractional reserve requirements.


Otherwise that's a signal for banks getting the kick in the head again.

Caviar Emptor's picture

Wow! Just what we needed: zombie consumers living paycheck to paycheck forced to shell out more for necessities and save less. 

But in an economy where we measure success by the size of your shopping bag, and your waistline, rather than anything being produced, we can declare a certain measure of vitory this morning. 

In a dream vision, the Wall Streeters, banksters and Fed officials can for one day feel like they see yuppies walking the streets again, swaggering in their tassled loafers......what a wonderful dream!

SheepDog-One's picture

Savings rate plunging=got to dip into last of savings to get by.

Snidley Whipsnae's picture

Or tack the purchases onto revolving credit cards... The Merican Way!

I know a lot of guys driving big trucks 60 miles to a job that is still paying 1990 wages... and they have lost medical bennies...

Lunch is a Big Gulp and a Slim Jim...

They saw their daddy doing it and they are still living the dream... Doing what their daddy did and doing it with a jaw full of snuff, YeeHaaw...

How is this going to end?

SoNH80's picture

Gotta have the big late-model truck, that is key in Rural America.  Preferably with appropriate talismanic brand names/slogans displayed ("Polaris"/"Arctic Cat"/"Fox Racing"/"Harley Davidson"/"U.S. Army Quartermaster Corps Retired"/"Monster Energy Drink" etc. etc.)  Loud pipes.  Gotta be a big man.  $0 down, 0% financing for 96 months.  We have gone totally FUBAR, and people are enjoying the last drops of juice from the rind while they can.

Version 7's picture

While manipulating the markets to keep them afloat, one of the collateral effects is that the oil price also goes higher, on the expectation of a future growth that indeed will never materialize. Congrats uncle Ben.

SheepDog-One's picture

Oil price...we havent seen anything yet just wait till the Syria/Iran war kicks off by early fall.