If the US consumer is expected to carry the US economy, then something is certainly off with the US consumer... and the economy.
Moments ago the BEA reported that in October Personal Income and Spending rose at a 0.4% and 0.1% rate respectively, with the first rising as expected, but the latter missing expectations of a 0.3% increase. This was the first 2 month miss in personal spending since July 2012.
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The jump in income was mostly due to a $36.8 billion increase in service-producing industry wages, which rose to $5.35 trillion, while spending failed to reflect this alleged increase in wages, which however was the result of an extensive revision to wage data going back to February.
But most notable was the dramatic revision in persona spending which the BEA engages in every year, and which in this case added tens of billions to historical disposable income, however without a mathced offset to personal spending.
As a result, what happened was that the personal savings rate soared to 5.6% in October, from 5.3% in September revised, and 4.8% unrevised, or as it was revealed last month. The dramatic decoupling in pre and post-revision savings is shown in the chart below.
And the punchline: if this data is accurate, and keep in mind the BEA has a habit of revising spending higher after it revises income, to "boost" GDP as we revealed last year, this means that the US consumer is hunkering down at an unprecedented pace, and the 5.6% savings rate is now the highest since 2012, suggesting not only are US consumer unwilling to spending much money, but are actively worried about what is coming just around the corner.
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Finally, as readers may recall in what we wrote in December 2014 in "Exposing The Deception: How The US Economy "Grew" By $140 Billion As Americans Became Poorer [7]" what the BEA did then was the opposite, and trimmed savings by almost 1%.
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Well, with today's release it just reversed this fudge which we exposed last year as the primary driver for the big Q3 GDP beat: because this is how that "drop" in savings was just revised higher once again.
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