Monday, February 28, 2011

Something Sustainable

Over the past twelve months the rate of personal spending is up even though personal savings has risen (the obvious key is that personal wages have risen more than consumption).

Why is this such good news? It means that the consumer is rebuilding their personal balance sheets and is not causing a drag on the broader economy by reducing their spending.

Source: BEA


  1. I dunno, incomes seem to be falling. How much of this increase in income is government transfer payments?

  2. revised to wages.... still on the up and up.

  3. As I understand the numbers, real PCE declined 0.1% and disposable income was up only 0.1% if you net out the effects of the reduction in withholding taxes and the expiration of Making Work Pay.

    I'll agree that the numbers are looking better as if the trend but there seems to be less to these numbers than the headline figures would intimate.