Biggest Drop In Govt Wages On Record Spark Spending Slump In November

Americans’ personal income and spending was expected to drop in November as benefits dried up and lockdowns were reinstated across the nation, and it did, by considerably more than expected.

Incomes fell 1.1% MoM (considerably worse than the 0.3% drop expected) and Spending dropped 0.4% (worse than the -0.3% exp) for the first monthly drop since April…

Source: Bloomberg

On a YoY basis, both income and spending growth slowed with spending down 1.3% YoY and incomes only up 3.8%…

Source: Bloomberg

Adjusted for inflation, real spending dropped 0.4% MoM – the first monthly drop since April. However, while Private wages rose 2.8% Y/Y, (a slight decline from 3.0% month ago), Govt wages continued to drop, down -2.3% Y/Y, vs -2.1% last month – that is the  biggest drop on record for govt wages…

Source: Bloomberg

Personal Savings rate slumped by 0.7% to 12.9% from 13.6% as Americans continue to burn through savings…

Will the new stimulus checks “fix” this?