Friday, March 30, 2012

Spending surges, but incomes lag



Personal spending up sharply (0.8%) in Feb, blowing away all forecasts, however, personal income up only 0.2% and January was revised down, from an originally reported gain of 0.3% to 0.2%. The savings rate fell to the lowest level in three years.

Households are spending out of savings and taking on more debt because income gains are just not there, despite the increase in jobs. The spending is not sustainable under that arrangement. It can only last for so long—either people run out of savings or, their debt gets too high again and they cut back.

Personal Savings as a % of Disposable Income

4 comments:

Matt Franko said...

Mike,

That big spike in mid 2008 seems to coincide with the large $650B bottom-up tax rebate checks that Bush/Cheney sent out starting in May of that year that added to the deficit.

Somebody get this message to the moron Paul Ryan.

Good stuff...

Resp,

paul said...

Matt

The question on Ryan is "stupid or evil"?

Mike Norman said...

He's both.

Mike Norman said...

Matt, I love the "Savings Clock." Can you make it bigger? Like, REALLY big?