What I Saw Last Week
Income & Spending data for the U.S. showed incomes rising by 0.4% and spending up by 0.1%. I had forecast incomes to rise by 0.3% and spending by 0.2%.
The increase in income was in-line with the 0.4% increase in aggregate earnings that was reported in the February employment report so no big surprise there. What is of greater interest to me is that all of the increases in consumer sentiment over the past several months has not translated into accelerated spending. Instead, consumers have opted to raise their personal savings rate, which now stands at 5.8% and is up from 5.5% in February and 4.4% in November.
Even more disappointing is the fact that the entire increase in spending was a result of a rise in prices. Real spending declined 0.1% in February after increasing 0.2% in January.
In summary, savings rose as spending…
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