US Consumer Taps Out: Personal Savings Rate Drops To Lowest Since December 2009

Tyler Durden's picture

The August Personal Income and Spending report is out and while there were some modest surprises in the data, namely a drop in Personal Income of -0.1%, on expectations of an increase of 0.1% (and an adverse revision for July data from 0.3% to 0.1%) - the first drop in two years, while Personal Spending was in line with expectations at 0.2% (previous revised from 0.8% to 0.7%), the biggest news of the day is that the US consumer is getting tapped out, with spending coming entirely from savings: the savings rate dropped from a revised 4.8% (previously 5.0%), to 4.5%, the lowest since December 2009.

August income components are not pretty, in fact they were pretty damn ugly:

Private wage and salary disbursements decreased $12.2 billion in August, in contrast to an increase of $23.8 billion in July.  Goods-producing industries' payrolls decreased $1.3 billion, in contrast to an increase of $6.3 billion; manufacturing payrolls decreased $2.9 billion, in contrast to an increase of $5.8 billion. Services-producing industries' payrolls decreased $10.9 billion, in contrast to an increase of $17.5 billion. Government wage and salary disbursements increased $0.4 billion, in contrast to a decrease of $1.8 billion.

And what is even worse is that based on other personal income, the primary source of "income" was and continues to be the squatter's rent where not paying one's mortgage effectively translates into income:

Rental income of persons increased $8.3 billion in August, compared with an increase of $8.1 billion in July. Personal income receipts on assets (personal interest income plus personal dividend income) decreased $5.7 billion, compared with a decrease of $5.8 billion.

Lastly, the government was not very generous last month: the result - a tapping of consumer bank accounts.

Personal current transfer receipts decreased $7.1 billion in August, compared with a decrease of $10.7 billion in July.  Government social benefits to persons for Medicaid decreased $10.5 billion, compared with a decrease of $13.6 billion.

And Goldman's take:

Weak Income and Spending

BOTTOM LINE: Weak real income growth a negative for consumer spending outlook. Downward revisions to consumer spending a small negative for Q3 GDP.

Personal income -0.1% (mom) for August vs. GS +0.1%, median forecast +0.1%.
Consumer spending +0.2% (mom) for August vs. GS +0.1%, median forecast +0.2%.
Core PCE deflator +0.15% (mom) for August vs. GS +0.1%, median forecast +0.2%.

1. Nominal personal income declined by 0.1% (month-over-month) in August, in contrast to consensus expectations for a small increase. Income from wages and salaries fell by 0.2%, the first decline since last November. Real disposable income-household incomes adjusted for taxes and the effect of price change-fell by 0.3%, and was up only 0.3% from a year earlier. Poor real income growth is a negative for the second half consumer spending outlook.

2. Nominal consumer spending increased by 0.2%, in line with consensus expectations. In real terms consumer spending was unchanged after a 0.4% increase in July. Real consumer spending growth was also revised down for June and July, and the result overall was a slight negative for Q3 GDP growth.

3. The core PCE deflator increased by 0.15% in August, or 1.6% from a year earlier. The overall PCE price index increased by 0.2% or 1.7% year-over-year.

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LawsofPhysics's picture

Bullish for collapse, bravo ZH!  Soon enough, the entire western world will be for sale, barter, or trade, as all fiat collapses.  Not really worried about China as they still need to feed a billion people and they bought a lot of our soybean crop last year.  Looking forward to paying off my remaining property notes with a few ounces of physical.  Better get the slaves and security details lined up now.  If you don't think this is exactly where states like Texas are already positioning themselves, you haven't been paying attention.

Max Hunter's picture

Could you imagine what spending would be if there weren't 5 million households living rent free????

mayhem_korner's picture

...or if the UE benefits clock timed out at 26 weeks instead of 99?

(channeling Yoda)  Believe you must: dire, straits are.

MillionDollarBonus_'s picture


I appreciate your contribution, but unfortunately forgiving rent would be totally unfair on banks whose balance sheets are already suffering. To boost aggregate demand we need to give people incentives to spend. This could be achieved through a fiscal stimulus program that gives people tax breaks for replacing old electrical equipment, or through easing monetary policy to discourage saving and encourage borrowing. The last thing we want is for people to save because this will cause a collapse in consumer credit. Our officials understand that, and that is why I am heavily invested in retail stocks.

HoofHearted's picture

Do we need to say it one more time for the three remaining Keynesian dipshits hanging around here? You need to have savings in order to invest it into worthwhile projects that will mak emoney. Borrowing doesn't get it done, bceaus it relies on inflation or more and more sales in order to work. Eventually, the consumer "taps out" of the spending or substitutes inferior goods for the ones they have been buying. You might go long potatoes or something, but retail? Really? Good luck with that.

Henry Chinaski's picture

But let's look at all the incentives to save...

Oh, I see.


MillionDollarBonus_'s picture

"Borrowing doesn't get it done". Sure it does - its been working for our economy for the last three decades, and interest rates are at RECORD LOWS.

Hero Protagonist's picture

Don't you think we're just getting a little soft :).

Surly Bear's picture

Let the economy contract, and it'll firm up. How far you ask? About 1965 because that was when shit started to become surreal.

Comay Mierda's picture

economic collapse sign #436

sheriff's office in high crime county will STOP dispatching 911 calls at midnight

let the anarchy begin...

moondog's picture

+1000 Hot Lead  I'm not worried about Florida as it is a Castle Doctrine state. Looking at the future of states like NY and New Jersey is much more gloomy.

Sean7k's picture

And debt has crippled the government, the banks and made the dollar worthless. You have a strange definition of "getting it done". The economy is destroyed and wealth has fled into the banksters accounts. Interest rates are at record lows because they arbitrarily set versus allowing the market to reward capital formation. 

All we get are discount trolls...

Sledge's picture

"[The] abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value... The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.... [This] is the shabby secret of the welfare statist's tirades against gold. Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

Alan Greenspan in an article he wrote in 1966.

Max Hunter's picture

"Borrowing doesn't get it done". Sure it does - its been working for our economy for the last three decades, and interest rates are at RECORD LOWS.

You're not even very bright about it.. All it has done was encourge unsustainable debt and the transfer of our industrial base to a non-producing fairy tale economy. And that's just for starters.

HoofHearted's picture

It works until it doesn't...just as always. But when you can't continue to make the Keynesian multiplier grow...well BOOM!!! or bust as the case usually is. When will you learn? Well, there's nothing so bad as one who willfully will not see.

(Disclaimer- I've borrowed to the hilt to invest in inverse ETFs and PMs. So borrowing can help in some ways, especially with the chief inflationist being at the helm of the Fed.)

EvlTheCat's picture

Great, I don't need to keep my money in the bank then making no interest. They will just print more when I withdraw mine anyway.

Keep interest rates low, and the banks are going to regret boosting all their bogus fees.

Getting people to borrow money that does not exist is as funny a concept as your comedy routine.

centerline's picture

Funny. I have always had a desire to create another login just to poke the beehive with the broken MMT stick to keep this place on it's toes. Thankfully there are still some folks around like you to keep the ball rolling! LOL.

From here, I think you push back with the line that the current problem is not too much debt - it is lack of the government and Fed not creating enough new stimulus debt to actually do what is needed to get the private sector out of the hole it is in!

EvlTheCat's picture

look out below centerline

kinganuthin's picture

So you want me to dump assets, for more debt in the name of a tax credit?  Yeah, right after I hire someone at 35K a year that I dont need for a free 5K..
Thank you for playing "should or should we not, follow the advice of the galactically stupid?"

SheepDog-One's picture

Look if youre going to be an effective troll, it takes much better work than what youre presently producing. More words does not mean better trolling. For instance, 'electrical equipment'? Egad...youve lost it man.

krispkritter's picture

I don't consider him a troll, more like comic relief. I mean he's the equivalent of a mime; you can't hear him, you can barely stand to watch(read) him, and as with passing one on the street, you laugh at the banal stupidity and walk away. DON'T FEED THE MIMES!

fuu's picture

Can we beat the mimes?

pods's picture

If you beat a mime in the forest and there is no one around to hear him scream, does it make a noise?


krispkritter's picture

ROFL. If you break his arms first, not even other Mimes can...

mayhem_korner's picture



You haven't taken the red pill yet, have ya sport?

EvlTheCat's picture

MDB manufactures the blue pills mayhem.

EvlTheCat's picture

They tried all that. It didn't work the first time
won't work this time. But you keep pretending to be

The only option left to stimulate the economy before a prolonged depression, is war. Real war. Not the destabilization bullshit the government keeps fucking up.

Hope people wake up to this fact soon. Or you will be sending your sons off to die for more bullshit.

donsluck's picture

Do your research. "Real war" does NOT stimulate the economy. That theory has been debunked. Consider the serious shortages of basic materials such as copper, steel, paper pulp, FOOD, energy, etc. that existed during WWII (the last "real" war). These are not the earmarks of a stimulated economy, they are earmarks of a seriously depressed standard of living.

EvlTheCat's picture

You are right. You don't have to convince me!

smiler03's picture

How many wars will it take?

2? 3? 4 or more?

EvlTheCat's picture

Zero as far as I am concerned.  Again, you don't have to convince me!

spankthebernank's picture trolling clown

Sean7k's picture

I agree, we wouldn't want to be unfair to banks! They merely caused the crisis, live off the debt interest they encourage the government to create, they charge 29% on credit cards- the benevolence is off the charts!

We could encourage savings and the formation of capital that could be used to produce goods and services, creating jobs and then allowing consumers who can now feed themselves to look for something to purchase too, but I can see that the creation of more debt by the government would be so much preferred.

Are you for real? Don't they put you trolls through a class at least?

SteveNYC's picture

This is the best, most consistent sattire ZH has ever seen. We should appreciate MillionDollarBonus' work here, it really is quite hilarious.

Sean7k's picture

Thanks Steve, having paying enough attention.

fuu's picture

I guess if you enjoy listening to the same bullshit spewed on every other media outlet it is funny otherwise it is just sad attention whoring.

Then again the comment section does echo.

SteveNYC's picture

It's all about context dude....

Max Hunter's picture

and that is why I am heavily invested in retail stocks.

And that's why you will be broke.. A saying comes to mind... "a fool and his money are easily separated"


Schmuck Raker's picture

Always worth a laugh, thanks MDB. Your my kind of troll. ;)

disabledvet's picture

i thought the reason slavery failed was because Wall Street determined it was too expensive and got rid of it.

donsluck's picture

Sir, your logic is warped. If the entire wester world is for sale, wouldn't that mean a desperate need for cash, ie that fiat SURGES?

Hayabusa's picture

Pay off notes with a few ounces of physical... LOL!  Keep dreaming and snorting on the physical "riches" dream pipe.  You must work for APMEX, or be heavily invested in PMs to say this kind of crap!

SheepDog-One's picture

Im dragging money out of the bank too, just to have cash on hand. I dont know how long it will be worth anything, but at least I have it and its not just some entry on a screen. 

Esso's picture

I'm not sure why anyone would keep money in a bank now. The interest on a $15,000 deposit amounts to about $3.00/yr.

You can get a pretty nice digital wall safe at Harbor Freight for less than $70 if you're obsessed with "safety."

SheepDog-One's picture

I still have the big floor safe my grand dad used as his bank. He saw the great depression and refused to ever put a dime within grasp of a bankers claw hand.

Overflow-admin's picture

Yup, thanks to globalization I had to use the same strategy... since september and the SNB berserk, I withdraw 60% of my net income -> cash.

(not talking about barbarous relics / sarc)

pops's picture

Yep.  At less than 1% return, there's not much incentive to keep it in the bank.  I've been converting it to gold and silver (price be damned) and I'm hitting the ATM for the max every day to have a source of ready cash when they declare a "bank holiday."

Cleared all my debts, gave away my TV (very liberating) and learned to thrive on beans and cornbread.  I may not be much fun to share a bed with (think dutch oven) but I sleep soundly.

I once had to live with only a weapon, entrenching tool and poncho.  I haven't forgotten how.

donsluck's picture

You sleep in a dutch oven?