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:
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
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.
If people are spending more than they are making, how can there be a savings rate at all?
Spending more than you make always works out well.
It is not what you make, but what you spend. People and govts ignore this simple truth at their peril.