US Savings Rate Hits Crisis Lows Amid Soaring Credit Card Debt

Amid soaring credit card use, the tumble in Americans' savings rate continued in December with a modestly better than expected 0.4% MoM rise in incomes and as expected 0.4% rise in spending (but upward revisions in spending).

For the inflation waters, the Fed's favorite price indicator, the Core PCE, saw a one-tenth gain to 0.2%, matching consensus, and was up 1.5% Y/Y.

Income is growing at 4.1% YoY - the most since Nov 2015 - but spending continues to outpace that growth.

Income growth is dominated by private worker gains, which are rising at an impressive clip, up 5.2% YoY, the highest since Nov 2015. Meanwhile, government workers arent' doing too bad either, with average wages and salaries rising 3.1% Y/Y.

What is odd is that despite the rise in incomes, Americans continue to spend more than they make, which means that the US savings rate continues to slid, and is now not only the lowest since the crisis, but is the lowest since September 2005.

Recall the striking Gluskin Sheff chart we presented a month ago, which showed that 13-week annualized credit card balances in the U.S. had gone "completely vertical" in the last few months of 2017. We now know why: American consumer are officially tapped out.

And remember David Rosenberg's "haunting math" from the GDP number:

"The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%."

As of today, that number would be even worse.

Comments

lester1 Mon, 01/29/2018 - 08:44 Permalink

Stupid people actually bought Bitcoin with their credit cards. They will pay the price.

 

MCD is skyrocketing and the chart looks gorgeous!! Easy $$$$

Creative_Destruct malek Mon, 01/29/2018 - 17:07 Permalink

"What is odd is that despite the rise in incomes, Americans continue to spend more than they make..."

WHY is this ODD?? NOT... we know this is a nation of debt junkies who have spread their addiction to the rest of the planet.

And yes, more obscene delusional Keynesian stats that brainwash the masses in the Orwellian way:

"The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%."

 

In reply to by malek

JPMorgan Mon, 01/29/2018 - 08:45 Permalink

More and more people cannot save and are borrowing to stay afloat.
That is not a sign of healthy global economy that's for sure.

Debt slavery.  

TeethVillage88s moriarty Mon, 01/29/2018 - 09:45 Permalink

QE or Operation Twist spiked Personal Savings Rate in 2013?  Did you get yours, cause I didn't get mine.

 

- Wealth Destruction World Record, USA in 2008 Financial Crisis, Destroyed 11 Trillion Dollars, but no one cared in US Congress

- Broken Windows Fallacy, Wars destroy Wealth, but we created 60 Trillion Globally to repair economies after 2008 Financial Crisis... see we can create credit, money, fiat, WRC, and funnel it to the winners in the Economy while destroying Wealth of the Losers

In reply to by moriarty

nuerocaster TeethVillage88s Mon, 01/29/2018 - 13:24 Permalink

Funny thing about excess global capacity and consumption and measuring wealth using terms like destruction.

Wealth has a material component and an information component. The information component is a lot like health.

The "Final Takeover" in 08 was inevitable given the evolution(devolution?)of the previous decades.

The Net Tax Receivers Club, The Monopoly Club, The Crime Syndicate Imperialism Club, had established their turf. The Leverage Club moves of derivatives and deregulation would eventually force the enlistment of CB infinite leverage for a central control and global taxation. If not 08 at some point in the near future.

In reply to by TeethVillage88s

Smerf Mon, 01/29/2018 - 08:48 Permalink

Speaking of being overstretched on credit card debt, take a look at General Electric and their 2017 earnings debacle.  An amazing company that has been destroyed by financial engineering and the short term greed of its executive branch.  It reads like a proxy of the global economy, and it doesn't look like a happy ending.

MarcusAurelius Mon, 01/29/2018 - 09:23 Permalink

Let's say nothing happens as a result of this. You know the Fed speak that "we are not likely to have a crisis again in our lifetimes stuff". The problem I have is being a debt slave in order to sustain bubbles. Who gains? Well we already know this. The rich. So say you have this rising income horseshit. When you claw back more than the percentage rise in hidden fees and higher costs of living what is the sense in measuring it to begin with? It is the same sort of crap that they would do when you give each household a one time free 1K check. How long does it take to spend it. What happens to ones lifestyle as a result? Nothing. Just stupid numbers. All for what? To keep a shitty corrupt industry afloat and to impoverish average people. 

LawsofPhysics Mon, 01/29/2018 - 09:23 Permalink

With banks paying NO REAL INTEREST why the fuck would anyone have a savings account?!?!?!

This despite the fact that the Fed gives these same fuckers FREE MONEY (thanks to ZIRP/NIRP and the TAXPAYER) and these same fuckers "loan" it back to the TAXPAYER for 2.7% interest!!!!!!

Why these people haven't been lynched by the taxpayer is a mystery to me.

Oh well...

"Full Faith and Credit"

same as it ever was!!!

rejected LawsofPhysics Mon, 01/29/2018 - 10:31 Permalink

"With banks paying NO REAL INTEREST why the fuck would anyone have a savings account?!?!?!"

Banks no longer need savers as they are now allowed to create the money they need. 

"This despite the fact that the Fed gives these same fuckers FREE MONEY (thanks to ZIRP/NIRP and the TAXPAYER) and these same fuckers "loan" it back to the TAXPAYER for 2.7% interest!!!!!!" 

That's life as a cash cow!

"Why these people haven't been lynched by the taxpayer is a mystery to me".

Same reason you and I are posting rather then doing. 

In reply to by LawsofPhysics

everything1 Mon, 01/29/2018 - 09:30 Permalink

I don't get raises over time and stay in the same job, I'm getting stretched over the years here.  People just don't see retirement happening, they are stretched so thin. 

They aren't tapped either out until the banks pull back, job cuts happen, until then we flying high.  As long as interest rates stay low we can keep going or rolling the debt over.