US Real Spending Crashes In December As Savings Rate Soars

Following government shutdown delays, data for Dec and Jan spending and income has just been released and its a bloodbath.

Confirming the collapse in retail sales that was called an outlier, December personal income fell 0.1% MoM (against expectations of a 0.3% rise) - the worst drop since Jan 2013; while personal spending plunged 0.5% MoM in January - the worst drop since Sept 2009!

What was bizarre is that as published by the BEA, the data revealed income data for January, but all the spending data for January was missing, as only December data was included (see link).

On a YoY basis, spending grew 4.0% in December - the weakest since Aug 2017; and in January incomes grew 4.3% YoY - back to the flattest in two years...

Additionally, real personal spending crashed 0.6% MoM...

That is the biggest drop since Sept 2009.

One thing is for sure - the collapse in the savings rate to placate the exuberance in spending confidence may have just hit a wall...

Finally, the reason why the economy collapsed in December is that as a result of the plunge in the market and the government shutdown, US consumers stopped spending and the savings rate soared...

... by the biggest monthly increase in 5 years, and the second biggest since the financial crisis.

Is terrible news on America's consumer, great news for the market? We shall see.