The savings rate for U.S. households fell in July to the lowest level in three months as spending outpaced income, the Commerce Department estimated Monday.
Consumer spending rose 0.4% in July while personal income increased 0.2%.
The report was mixed in terms of market expectations. Incomes rose less than the 0.3% expected, while spending was stronger than the 0.3% gain expected by economists surveyed by MarketWatch.
Real (inflation-adjusted) spending increased a seasonally adjusted 0.2% in July after a 0.1% gain in June, led by a sizable increase in purchases of durable goods.
Real after-tax incomes fell 0.1% in July, compared with a downwardly revised 0.1% gain in disposable incomes in June. This is the biggest decline since January.
The savings rate fell to 5.9% from 6.2% in June, which was the highest level since June 2009.
Source: BEA
Not much intuition here, but the numbers for the late 90s in the chart look extraordinary. Any thoughts on how to link intuitively to Real GDP growth and household debt burden?
ReplyDeletei'll see if i can't provide details breaking out the personal income gains (i.e. salary vs. return on assets), but my guess is the growth spurred the amount of household debt growth as individuals became accustomed to spending more and more, but incomes stopped keeping up. as a result, they turned to debt and monetization of capital gains (on houses for example) to maintain those gains.
ReplyDeletethe gain in personal income also hit the wall in the 00's when corporate profits surged (profits went to owners of capital vs. labor), which decreased investment and has played a significant role is the slowing of the economy IMO
I know my income has been growing VERY slowly!
ReplyDelete