Judging by the just released personal income and spending data, consumers are already forecasting a long, harsh winter. With incomes and outlays expected to rise by 0.3% and 0.2% respectively, the July data was a big dud, missing on both expectations, and while income rose by a modest 0.2%, far below the 0.5% in June, it was personal spending which in fact declined by 0.1%, a major drop from the 0.4% increase in the prior month, and the first outright decline in spending since January. As CNBC's Steve Liesman explained the disappointing data: "weather."
[5]
The monthly tumble in spending is clearly an indication that either the lovely weather is not priced to perfection, or harsh winter is coming:
[6]
The very unexpected drop in outlays was driven by a contraction in spending for both Durable ($9.1) billion and Non-Durable Goods ($3.4) billion.
[7]
And while today's income and spending data is bad news for the economy and Q3 GDP, which is about to be slashed by 0.5% by the sellside, likely pushing it into the 2%-range, it is great news for the tapped out US consumer, whose (repeatedly revised) savings rate of 5.7%, up from 5.4% in June, just rose to the highest since 2012.
[8]
