While expectations for today's March Personal Income and Spending were for a rise of 0.3% and 0.4%, which if confirmed would have pushed the 3.7% savings rate to the lowest since 2007. Instead we got a reversion, with Income rising 0.4%, higher than expected, while Spending printed at 0.3%, the lowest since December 2011, just below expectations, and tumbling from February's 0.9% print, the biggest slide since August 2011. In real terms, spending was up 0.1% and income up 0.2%. The data also confirms that at every moment somewhere in the world, people are laughing at Joe LaVorgna, whose forecast of a 0.6% rise in personal spending was just 50% off. Most importantly, the surprising inversion between spending and income, pushed the savings rate from 3.7% to 3.8%, just shy of 4 year lows, and the first increase in 2012, although well below the 4.9% savings rate in March 2011, which means that increasingly the consumer is tapped out. When one takes away the impact of the record warm winter (of which March data was still part of), it becomes quite clear that unless Joe Sixpack is charging everything, then Q2 GDP will be a very big disappointment.
What is odd is that incomes in March did not increase due to an abnormal rise in wages:
Private wage and salary disbursements increased $17.3 billion in March, compared with an increase of $24.1 billion in February. Goods-producing industries' payrolls decreased $1.3 billion, in contrast to an increase of $1.8 billion; manufacturing payrolls increased $0.1 billion, compared with an increase of $1.6 billion. Services-producing industries' payrolls increased $18.6 billion, compared with an increase of $22.3 billion. Government wage and salary disbursements increased $1.4 billion, compared with an increase of $0.7 billion
Instead, for those wondering what generating a big portion of the rise in Personal Income, look no further than your favorite welfare state (source):
Personal current transfer receipts increased $11.6 billion in March, compared with an increase of $0.3 billion
in February. Within current transfer receipts, government social benefits to persons for social security increased
$6.8 billion, compared with an increase of $2.6 billion.
In other words, if it wasn't for the government, the savings rate would be at the lowest since 2007.
The consolidated ugliness in its full front, courtesy of Bloomberg: