Savings Rate Tumbles Back Near Record Lows As Americans Spend More Than They Make For 28th Month In A Row

While US personal incomes grew, as expected, at 0.3% MoM, Americans resumed spending fare more than they make (increasing 0.6% MoM in April). For the 28th month in a row, YoY growth in spending has outpaced incomes, sending the savings rate back down to just 2.8, the lowest since the debt-funded holiday spending spree of December 2017, and just shy of record lows.

Spending YoY is the highest since April 2017:

Adjusted for inflation, real consumption rose 0.4%, double the median projection of 0.2%. The Commerce Department said spending for gasoline and other energy goods, as well as household utilities, were leading contributors to the monthly increase in real outlays. Real durable goods spending, rose 0.3% after a 1.9% increase in the prior month; nondurable goods advanced 0.4% for a second month. Outlays on services, adjusted for inflation, rose 0.4% after a 0.3% gain in prior month.

On the income side:

  • Private sector wages rose 4.9% YoY vs 5.0% in March
  • Government wages accelerated to +2.6% YoY, vs 2.5% in March

And at the end of all this, spending more than you're making sent the savings rate back down near record lows.

Meanwhile, looking at the inflation side of things, the PCE Deflator, or headline spending - the Fed's preferred inflation indicator - rose 2.0% Y/Y, in line with expectations, while core PCE rose 1.8%, a drop from last month's original 1.9% print which was however revised lower to 1.8%. Yet curiously, on a monthly basis core PCE rose 0.2%, or more than the 0.1% expected.

Comments

MusicIsYou gatorengineer Thu, 05/31/2018 - 08:47 Permalink

They think they can speak a great economy into existence. That's what happens when the people allow nuts with a god complex to run their country. They think reality will follow whatever they pull out of the sky. That's why the stock market can stay up forever while the reality around turns to crap. When the oligarchy of a country lives in a fantasy land,  there is no possible way they can fix reality. The high numbers in the markets will continue to soar,  but they will transition from trading platinum to trading dog crap. Meaning the numbers in the markets will transition to trading nothing of value,  but it will have a high price. 

In reply to by gatorengineer

shortonoil MusicIsYou Thu, 05/31/2018 - 10:34 Permalink

Hardly surprising when the machines of HFT are twisting the price of everything into maniacal knots. It's pretty hard to control ones money when the prices of everything stop making any rational sense. $102 for an HP printer cartage, when the entire machine originally cost $169, or how about $300 for a share of Tesla, or $70 for a barrel of oil that is only worth $46. The entire monetary system is going off the deep end, but consumers aren't saving. Surprise!

In reply to by MusicIsYou

overmedicatedu… Thu, 05/31/2018 - 08:49 Permalink

the break up of the NWO reaches into every pocket..except those that brought us to this point..bob rubin is pointed out by Taleb in his book "Skin in the Game"..walked away from citi bank with millions, after his leadership make citi BK..then the taxpayer stepped in..private profits ..and public losses is the nwo reptile motto..EU will show them serfs voting against them..how dare they?

LawsofPhysics Thu, 05/31/2018 - 08:51 Permalink

LOL!  Well, if the cost of rent, utilities, and food is more than what they earn, what the fuck do you think they will do?  Especially if the banker/financiers (who have access to FREE money without having do do any real work or face any real risk) keep offering them another credit card!!

Get back to work debt slaves! It's your own fault that you were not born into the right family or chose to be a moneychanger!!

someday the producers of real things and real value will take back control...

in the meantime...

"Full Faith and Credit"

same as it ever was!

rejected Thu, 05/31/2018 - 09:03 Permalink

All this fantastic information from the FRB and government.

Yep,,, nothing more credible than those two except maybe CNN, ABC, CBS, NBC and Market Watch,

MusicIsYou Thu, 05/31/2018 - 09:09 Permalink

People be like "Money loses value so I may as well spend it on stuff that loses value. " Yeah that makes sense somehow. Yeah,  and then we can fill up the land with billions of tons of trash and have real estate lose value too. And then nothing will have value,  but the stock market will be soaring as companies bulldoze the garbage from one location to another. And then stock brokers won't actually be stock brokers anymore,  they will really be garbage men. So we're entering a period in history now where stock brokers is a fancy name for garbage men. 

MusicIsYou slyder wood Thu, 05/31/2018 - 09:27 Permalink

Yeah but there is not really any such thing as adventure travel anymore,  because just about everywhere you go - American Express is there. I mean come on,  there's no such thing as exploring anymore.  You can't even walk into a cave somewhere without signs telling you to stay on the trail,  and do not touch the protected limestone walls or you will get prosecuted. Western civilization made the world suck.

In reply to by slyder wood

slyder wood MusicIsYou Thu, 05/31/2018 - 11:43 Permalink

Ones interpretation of “adventure ”is subjective. The point being most people don’t regret spending money on travel for pleasure. Oils, cosemetics, etc from humans damages cavern surfaces. Cave exploration is probably one of the best adventures left. There is a vast network of unexplored caverns all over the world, not to mention underwater caverns in Florida. I knew some guys in Kentucky who used to put on wetsuits and squeeze thru narrow cracks to get to big rooms. I’m a river runner myself, independent, no outfitters needed. But a paddle trip costs me maybe $500 for shuttle, food, gas. That’s usually for two people on river for at least 5 days.

its out there, go get some

In reply to by MusicIsYou

Bill of Rights Thu, 05/31/2018 - 09:19 Permalink

Save? save for what...lol FUCK IT! YOU SAVE, and the pricks suck you dry anyway in the form of Property tax increases, water and sewer bill increases Trash, Gas prices, you name it...so save lol. Ya ok.

itstippy Thu, 05/31/2018 - 09:39 Permalink

Team logo cap = $20

Name brand shorts = $30

Name brand tee shirt = $20

Name brand athletic shoes = $60

Fashionable sunglasses = $40

Water bottle = $10

Fanny pack = $20

A typical American spends $200 on clothes and accessories just to dress casually.  Some spend much, much more.  They'd look and feel 100% better in cutoff shorts, a generic cotton tee, and flip flops.   Spending every cent you've got on stuff to make you feel better about yourself is a losing game.  Brainwashed by advertising, the majority of Americans are broke, stressed out, and unhappy as they try to live the ideal lifestyle as portrayed on TV, magazines, and the internet.

Kickaha Thu, 05/31/2018 - 09:40 Permalink

5% wage increases?  Minimum wage increased in 18 states on 01/01/18, and that alone accounts for this "year-over-year" increase.  Worker productivity, or labor scarcity, had nothing to do with it.

The whole article is rendered worthless by its reliance on inflation adjustments made with the phony 2% government inflation rate.  Under-reporting of inflation: (1) Allows for the gov. continuously to report increases in "real" GDP each year, and a "tepid economic recovery" when in reality GDP has been in decline ("depression") if the actual rate of inflation is used; (2)  Allows for cheap rollover of the $20 T national debt; (3)  Allows for fraudulent calculation of COLA on Soc. Sec. benefits and any other federal expenditure indexed to inflation; and (4) Allows the FRB to claim that increasing its balance sheet by $4 T has not debased the currency significantly. 

There is no mystery why people are saving less.  They are earning less each year in dollars adjusted to the true rate of inflation (5%-8%) (unless the .gov passed a law requiring the payment of a raise), then paying more for the necessities of life.  That equals a persistent decline in the savings rate.

While images of MadMax world are far more dramatic, this is how it actually ends, with people and families falling off the edge of the world of self-sufficiency, one by one, silently, with no fanfare whatsoever, to disappear into suicides, tent villages, or the basements of relatives, while those not yet in those places think it cannot happen to them. as they have "good jobs" and "work hard" to provide for themselves.

The Real Tony Thu, 05/31/2018 - 10:10 Permalink

Probably due to rents driven sky high by the Chinese buying up all the homes and pushing prices to the moon on the west coast. Now Americans have no disposable income left. It will only get a lot worse.

TrustbutVerify Thu, 05/31/2018 - 10:57 Permalink

But so much of what they do spend is on foreign goods.  Even the "American brands" they buy, because they are so "classic", are oh-so often made in foreign countries.  

Great strategy!

And they wonder why they feel their lives are mired in quicksand...waiting for government to fix things for them.  

ElTerco Thu, 05/31/2018 - 13:48 Permalink

I'm guessing this is retirees drawing down savings.

It is a double whammy, because for the 50+ crowd, it goes from $xxx savings per month before retirement to $xxx spending per month after retirement, for a net of twice $xxx draw down in the aggregate savings rate.

If I'm right, it implies that retirees started to accelerate their retirement en masse at the end of FY 2014.

Argenta Thu, 05/31/2018 - 14:18 Permalink

I spend almost what I make, but I contend this is good and prudent in my case.  Why?  Although I'm certain what I'm doing doesn't apply to most of the people this statistic centers around, if you are spending excess fiat on precious metals, it seems to me that's not a negative.  Technically I'm in this group, and proud of it.

The difference being I have a safe full of silver and gold, just no cash in the bank.

-Argenta

Chocura750 Thu, 05/31/2018 - 14:33 Permalink

Is there a reliable measure of inflation or is it subjective?  Is shrinkage accounted for?  Is rent adjusted for the size of the rental property?  A roll of toilet paper today has a diameter that is smaller than in the past and an empty core size that is wider.  Is inflation like obscenity, you'll know it when you see it?

cornflakesdisease Fri, 06/01/2018 - 01:38 Permalink

Crap article.  The FED's MZM has never been higher.  https://fred.stlouisfed.org/series/MZM

 

It just means many people buy everything with credit cards and then pay it off each month (myself included) and many other people are even more seriously in debt then this article lets on.

 

I have $10, and you owe $9.  When averaged based on that, most people have a $1 savings.

 

Funny numbers.  You need better indicators and methods.