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Personal Savings Rate Rises To Highest Since January As Spending Grows At Lowest Rate In One Year

Tyler Durden's picture




 

The latest confirmation that the US consumer is rapidly retrenching ahead of the great unknown which is the US fiscal cliff was the just released May data on Personal Spending and Income, both of which came in as expected, at 0.0% and 0.2% over the prior month. This was the lowest rate of increase in the Personal Spending rate since June 2011, when spending posted a -0.2% decline. This was to be expected considering the ongoing contraction on the income side: "Private wage and salary disbursements increased $1.1 billion in May, compared with an increase of $5.3 billion in April.  Goods-producing industries' payrolls decreased $7.0 billion, in contrast to an increase of $5.6 billion; manufacturing payrolls decreased $4.5 billion, in contrast to an increase of $3.2 billion." The collapse in manufacturing wages was somewhat offset by gains in services: "Services-producing industries' payrolls increased $8.3 billion, in contrast to a decrease of $0.4 billion.  Government wage and salary disbursements increased $0.3 billion, compared with an increase of $0.4 billion." And for the best indication of just how consumers feel about the economy, one just needs to look at the savings rate: at 3.9%, this was the highest savings rate since January as any free money enters not the economy, but bank checking accounts and counterparty risk-free mattresses.

As for the rate of change in spending:

 

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Fri, 06/29/2012 - 08:47 | 2572789 ihedgemyhedges
ihedgemyhedges's picture

Cue Jan Hatzius and Cue E3....................

Fri, 06/29/2012 - 08:54 | 2572827 slaughterer
slaughterer's picture

People are saving for vacation this summer.  

Fri, 06/29/2012 - 09:02 | 2572856 CPL
CPL's picture

Que the milestone for stagflation.  Just like japan, people hide money everywhere.  The banks aren't the only things with saving in them.

 

http://www.tumblr.com/tagged/seiwing-money-into-curtains

Fri, 06/29/2012 - 09:21 | 2572938 ihedgemyhedges
ihedgemyhedges's picture

First part of my prediction: check.  That didn't take long.............

Fri, 06/29/2012 - 08:49 | 2572799 fonzannoon
fonzannoon's picture

Is this inflationary or deflationary? Sorry to sound stupid.

Fri, 06/29/2012 - 08:51 | 2572805 SheepRevolution
SheepRevolution's picture

Neither. Strictly speaking, the money supply doesn't change when savings increase.

Fri, 06/29/2012 - 08:58 | 2572843 LULZBank
LULZBank's picture

But banks "deposits" go up, which can be collaterilised for collateral calls incase of downgrades or bets gone bad.

Also, multiplied many times via fractional reserve banking.

So yes, this is inflationary or deflationary.

Fri, 06/29/2012 - 09:13 | 2572904 beentheredonethat
beentheredonethat's picture

Money velocity has run off its own fiscal cliff. On its way to 0. fed has no bullets- you can print infinite money now, until the complete collapse.

Fri, 06/29/2012 - 08:52 | 2572820 bdc63
bdc63's picture

"Is this inflationary or deflationary?"

... yes ...

Fri, 06/29/2012 - 09:06 | 2572871 Shizzmoney
Shizzmoney's picture

It's not stupid to ask, because the situation is really confusing.

Inflation would be the first thing on people's minds b/c of the fact that the markets want QE3 to insure it...but the fundamentals say otherwise (as well as the fact it is an election year).

Considering Oil is at its worse price since 03/08, and corporate earnings are expected to dip since the economy is clearing stalling, I expect deflation to continue for common McStuff like TVs, Cars, Electronic gadgets, etc.  Inventory can't just sit there.....hell, even some retail companies who can't sell their shit are selling it back to their vendors.  This tells me the prices of McStuff is going to continue to fall, including houses.

Now, McStuff isn't food, or rent, or healthcare, or college.  I expect these to continue to rise, because these prices are often manipulated by outside forces that control the "market" we have today (that is, a rigged one), and the forces that control these costs are often big mega-corporations that are protected by governments.  Rent and lodging is going to rise as well, and what's weird about that is that housing prices continue to fall......yet rent is rising because the Millenial generation, for the whole, isn't making any income that keeps up with inflation for shit they need as well as the fact we are deleveraging debt.  So we can't buy houses, but we need a place to live.....that means vacancy rates are low, which is bullish for landlords and higher rents.

Bascially, its a rentier's economy and the 99% of us are living in it.

Fri, 06/29/2012 - 09:45 | 2573036 veyron
veyron's picture

It would seem that you are describing biflation.

Fri, 06/29/2012 - 09:05 | 2572874 dwdollar
dwdollar's picture

That might depend whether it's in a savings account or under the mattress.

Fri, 06/29/2012 - 10:18 | 2573129 poor fella
poor fella's picture

There's something about an ammo box full of cash and PMs.

I have a feeling decades from now, there's going to be a large market for metal detectors and people poking around attics, basements, and in walls for forgotten/lost stashes..

Fri, 06/29/2012 - 09:27 | 2572966 CPL
CPL's picture

Stagflation.

People save to protect themselves from political retards and hope that the interest rate keeps up with the Government and Central Bank fuckups regarding inflation.

 

However this doesn't work.  In an inflationary period survival depends on two things.

1)  Spend all your money before it's worthless

2)  Save your money in PM's.  All those Japanese tourist you see visiting have one thing in common.  They don't trust their government as far as they could throw them.

 

Fri, 06/29/2012 - 08:50 | 2572800 who-is-john-galt
who-is-john-galt's picture

This couldn't possibly be because enough people are realizing that they have to live within their means so others don't have to could it?

Fri, 06/29/2012 - 08:52 | 2572822 Intelligence_In...
Intelligence_Insulter's picture

Living within your means is loser talk.  Fuck off Rand boy

Fri, 06/29/2012 - 09:21 | 2572941 who-is-john-galt
who-is-john-galt's picture

Yes being responsible.  How loserish of me.  How is life on the welfare system?

Fri, 06/29/2012 - 09:03 | 2572861 TrumpXVI
TrumpXVI's picture

Definitely in my case.  I'm trying to turn myself into a saving machine.  

So I can take a vacation or buy a new car?  

Nope, so I can pay the property taxes on my house and keep a (leaky) roof over my head.

Fri, 06/29/2012 - 09:10 | 2572893 Shizzmoney
Shizzmoney's picture

If people actually had any means to live on.

But fuck people who can't afford food+rent despite working 2+ jobs.  Yeah, that will show them!

Fri, 06/29/2012 - 08:52 | 2572810 mendolover
mendolover's picture

I actually admire the CNBS gang this AM who just finished busting balls on the man in lieu of a governor in my home state of CT.  The guy is just a dick.

Fri, 06/29/2012 - 08:52 | 2572821 ihedgemyhedges
ihedgemyhedges's picture

Yet this board now knows you watch CNBC.........................

Fri, 06/29/2012 - 08:55 | 2572830 bdc63
bdc63's picture

saw it too.  now if they would just give the same treatment to the banker crowd -- instead of batting their eyelashes and melting in their pressence -- they might gain my admiration as well.

Fri, 06/29/2012 - 08:58 | 2572840 ihedgemyhedges
ihedgemyhedges's picture

Yeah, you just keep waiting for that...............

Fri, 06/29/2012 - 08:52 | 2572814 Stuck on Zero
Stuck on Zero's picture

Your guide to the economy:

Manufacturing sector:  Making things you want.  Cars, iPODs, bathtubs, washing machines etc.

Services sector:  Making you pay for things you don't want.  Lawyers, tax preparers, billing services, enforcers, etc.

 

 

Fri, 06/29/2012 - 09:02 | 2572858 Doubleguns
Doubleguns's picture

Services sector:  Making you pay for things you don't want.  Lawyers, tax preparers, billing services, enforcers, etc.

 

You forgot one. Health care tax.

Fri, 06/29/2012 - 09:06 | 2572876 Jim in MN
Jim in MN's picture

PhD's in burger flipping and drone assassination.

Fri, 06/29/2012 - 09:04 | 2572824 midgetrannyporn
midgetrannyporn's picture

I wonder if that last rise was almost entirely from the gubbermint house buyer rebate? (Go into debt and the savings rate goes up?)

Longer term chart:

http://2.bp.blogspot.com/-UF_UJ-09ciU/T3eTtZjLX1I/AAAAAAAAMnw/ZYcdByh7gh...

Fri, 06/29/2012 - 08:54 | 2572828 Jason T
Jason T's picture

rental income .. what's up with this? it's up 16% y/o/y

http://research.stlouisfed.org/fred2/graph/?id=A048RC1

Fri, 06/29/2012 - 09:05 | 2572845 bdc63
bdc63's picture

If that's residential real estate rental income, it makes perfect sense.  People losing their homes have to live somewhere, so they become renters.  Increase in rental demand causes increase in rental prices.

That chart is actually text book ... right when our government lowered interest rates and the banks started all of their 'creative financing', rents, which had been steadily increasing, headed south.  As soon as the bubble burst in 2007, rents started climbing (reguardless of what was happening to interest rates).

Now, if that's commerical real estate, it makes no sense to me whatsoever.

Fri, 06/29/2012 - 09:17 | 2572923 Jason T
Jason T's picture

in other words, as more and more Americans become serfs and have to pay their land"lords" rent to work veggitate on the land watching TV and playing video games, the rental incomes for the land"lords" goes up.  

Fri, 06/29/2012 - 09:48 | 2573035 Shizzmoney
Shizzmoney's picture

Rents are high in areas of relatively good employment, like NY, SF, and Boston.  Here in Boston, with a vacancy rate of 2%, a studio 4-6x11 often goes for $1200+ a month.  The majority of my friends under 35, unless with a spouse, live with roommates to keep their rents hovering around $500-$700/mth.  This despite the majority of us making less than $35/K a year.

As we would say on ZH, "The math eventually doesn't add up."

Individual indepdence is dying.  This song by "Atmosphere" called "You" details my generation (a young woman who is a waitress) struggles with making it today in a world where the means don't justify the end, but yet are only held up with "pride":

Now attitude check,
Still show up? You haven't quit yet?
And even when you're meek and sweet,
They still treat you like a piece of meat. Huh.
Outrageous, each day this clock tick tock and you still a waitress.
Trying to pay them student loans
And the lights and the phone and the food and the home.
And you ain't quite broke but you couldn't afford that place on your own.
Gotta roommate, to split the rent with
Now you never feel independent.
And everything seems so hallow
Cause after work, where'd that smile go?
Better bring it back tomorrow.
Now, pick up the pace and you might make bar close.

http://www.youtube.com/watch?v=ob_JP23n754

Fri, 06/29/2012 - 08:56 | 2572835 SheepDog-One
SheepDog-One's picture

'Personal savings'? Pffft....USSC and ObaMao got a solution for THAT little problem with the peasants.

Fri, 06/29/2012 - 08:58 | 2572841 SmoothCoolSmoke
SmoothCoolSmoke's picture

Dow up 343 SINCE 2PM YESTERDAY!!!!  If you think the Dow is the economy (as the sheep have been conditioned) ALL IS WELL. 

Fri, 06/29/2012 - 09:04 | 2572862 bdc63
bdc63's picture

The black swan has seen her shadow and gone back into hibernation.  Good thing Bernanke didn't cave to the pressure and use his last bullets, 'cause this rip-roaring economy doesn't need it.

Fri, 06/29/2012 - 09:00 | 2572850 Cursive
Cursive's picture

Congress will pass a law that if you don't shop, you will be subject to a 10% retail penalty (SCOTUS: tax).  Persons on food stamps will be exempted.  Problem solved.

Fri, 06/29/2012 - 09:08 | 2572883 bdc63
bdc63's picture

I think when they stopped calling us "citizens" and started referring to us as "consumers" that was already implied

Fri, 06/29/2012 - 10:25 | 2573156 poor fella
poor fella's picture

+++++  lol 

You'd think somebody would get this? Do these people call bellmen and valets, 'boy'?

Fri, 06/29/2012 - 09:03 | 2572859 Jim in MN
Jim in MN's picture

I've got a mattress to share with the right counterparty.  But I wouldn't call it 'Risk-Free' exactly.

Fri, 06/29/2012 - 09:05 | 2572866 Jim in MN
Jim in MN's picture

I like Doug Short's chart for this statistic and the all important real disposable personal income per capita (say that three times fast). 

 

http://www.advisorperspectives.com/dshort/updates/DPI-Monthly-Update.php

 

(Not updated yet on the new release)

Fri, 06/29/2012 - 09:05 | 2572869 Signs of the end
Signs of the end's picture

These figures are, like figures everywhere, probably manipulated. A downturn in consumer spending does not necessarily translate into an upturn in savings. What it probably means is that people have less access to credit and therefore cannot spend as much, it does not necessarily mean that they are stuffing mattresses! People have little, if any, disposable income left to save (unless you work on one of the top floors on Wall Street!)

http://apocalypse2010.blogspot.ca/

Fri, 06/29/2012 - 09:08 | 2572884 Popo
Popo's picture

Starting to feel stupid with that domain name yet?

Fri, 06/29/2012 - 09:07 | 2572879 Kaiser Sousa
Kaiser Sousa's picture

"One debt coupon dollar...worthless
Each Silver ounce round....priceless"...

Fri, 06/29/2012 - 09:09 | 2572892 azzhatter
azzhatter's picture

I'm pretty much off the grid but I have cut spending by 70% over the past 2 years. We all need to starve the beast, it's the only way to win.

Fri, 06/29/2012 - 09:19 | 2572926 adr
adr's picture

Nike anounced that guidance moving forward will be terrible, and they missed expectations sending the stock down 14%.

Ford said losses in Europe are going to triple by the next quarter.

Yeah, the economy is doing great!

Fri, 06/29/2012 - 09:22 | 2572943 bdc63
bdc63's picture

In a world where deficits don't matter, I'm guessing profits don't matter either ...

Fri, 06/29/2012 - 09:20 | 2572936 riley martini
riley martini's picture

 4% is not enough savings with pensions getting wiped out due fraud and wealth transfers to fed supported banks by ZIRP , 1.7%Return on the 10 year UST. Trillions in transfers from bank fraud to tax payers Freddie, Fannie, Fed balance sheet means less for SSI.

Fri, 06/29/2012 - 09:33 | 2572990 MrBoompi
MrBoompi's picture

An economy that is harmed when its citizens save more is not a very healthy economy.

Fri, 06/29/2012 - 10:22 | 2573144 Jim in MN
Jim in MN's picture

An economy that has manipulated interest rates so badly as to destroy the incentive to save for a generation, and added such deep corruption as to preclude any real rate of return on risk assets, is not just unhealthy.  It is moribund.

Fri, 06/29/2012 - 09:34 | 2572996 Caveman93
Caveman93's picture

Our household "personal" savings rate is closer to 60%. I feel so alone. :(

Fri, 06/29/2012 - 09:56 | 2573061 Hohum
Hohum's picture

If I understand correctly, the "savings rate" is income minus spending.  For example, income $5,000 and student loan payment $500, then the savings rate is 10%

3.9% is still a very low number.  Call it retrenchment lite.

Fri, 06/29/2012 - 10:29 | 2573165 CosmicDebris
CosmicDebris's picture

People are able to save money?

Fri, 06/29/2012 - 11:14 | 2573303 eclectic syncretist
eclectic syncretist's picture

People either can't access or don't want as much bank issued debt.  Very bad for banks, very good for people.

Fri, 06/29/2012 - 11:19 | 2573319 Snakeeyes
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