US Savings Rate Plummets To Second Lowest Since 2008 To Pay For March Spending Spree

There was good and bad news in today’s personal spending report. First the good: US consumers saw their personal income rise by 0.5%, or $78 billion, in March to a $14.5 trillion SAAR, driven mostly by a $32 billion increase in service wages, as well as $16 billion from government transfer receipts.

Now the bad (or, if one is a Keynesian, doubly good) news: personal spending more than offset the increase in income, rising by 0.9% or the most since August 2009, which rose to $12.3 trillion SAAR, driven roughly equally by an increase in spending on Goods ($53 billion) and Services ($54 billion). Curiously the increase in goods spending was the single biggest monthly increase also since August 2009. As for services, the systematic increase on spending over the past several months is unmistakable as far more money is allocated toward healthcare, that one major spending category which rescued Q1 GDP.

Goods spending:

Services spending:

 

It would appear there was no “harsh weather” effect in March, even though corporations, and not to mention the Q1 GDP, can’t complain fast enough about how horrible the month and the quarter both were.

End result: since spending was so much higher than income for one more month, at least according to the bean counters, the savings rate tumbled once more, and at 3.8% (down from 4.2% in February), was the second lowest since befire the Lehman failure with the only exception of January 2013 after the withholding tax rule changeover.

 

So for all those clueless sellside economists who are praying that the March spending spree, funded mostly from savings, will continue into Q2 (because remember March is in Q1, which as we already know had an abysmal 0.1% GDP growth rate), we have one question: where will the money come from to pay for this ongoing spending spree?




via Zero Hedge http://ift.tt/1hgSUxb Tyler Durden

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