Amid soaring credit card use, the tumble in Americans’ savings rate continued in December with a modestly better than expected 0.4% MoM rise in incomes and as expected 0.4% rise in spending (but upward revisions in spending).
Income is growing at 4.1% YoY – the most since Nov 2015 – but spending is still outpacing that growth…
Income growth is dominated by private worker gains – up 5.2% YoY, the highest since Nov 2015…
Which means,this is the lowest savings rate since the crisis… (in fact the lowest since September 2005)
Recall the stunning Gluskin Sheff chart we presented a month ago, which showed that 13-week annualized credit card balances in the U.S. had gone “completely vertical” in the last few months of 2017 which we said “should make for some great Christmas.”
And remember David Rosenberg’s “haunting math” from the GDP number:
“The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%.“
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