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Consumer spending goes up, income does not
http://www.marketnewsvideo.com/story...py-Econ102811/
This should be a wake up call for anyone that thinks we're in a recovery, wherever the money is comming from is gonna be in big trouble, we don't know what is happening to the debt (I sererously doubt its comming from savings), but if the banks and investment firms are securitizing it and re-selling it, and then sercuritizing insurances on it, we are in for a big big redo of 2007/2008.
It would be very interesting to know where the money is comming from, and what is happening to the debt, (I would be extremely suprised if it was'nt being sercuritized, what institution would want to take that kind of exposure on their own, and not try make an extra buck off it.)
Whats also interesting is that real disposable income DROPPED b 1.7%. If someone can figure out where that consumption is comming from, what is being done with the debt, where its being securitized and shipped off to, and the nature of those securities, you could make a buck or 2 when this thing blows up again.
They explain it in the article, which you probably didn't read anyway (given your post volume). When spending goes up, savings go down!
"In turn, the consumer savings rate fell from 4.1% to 3.6%."
The savings rate, that does'nt explain where the money is coming from. It just explains where its not going to.
It's coming from the income they would have otherwise saved.
bingo
and, in case you didn't know, this is a good thing. Saving too much money hurts an economy badly.
Well, not saving might too, but it is much better to go that way than the other.
ITT RGacky gets other people to read for him.
The small change in the national savings rate doesn't explain the resurgence of consumer spending. A portion of the increase can be attributed to an increase in consumer lending. A portion can be attributed to a reduction in the savings rate and another portion can be attributed to federal budget deficits which have provided consumers with more spending power (I.e. Payroll Tax Relief).
I'm going to go out on a limb here and say the numbers add up:
A report showed consumer spending rose 0.6% in September, while personal income rose just 0.1%.
In turn, the consumer savings rate fell from 4.1% to 3.6%.
The figures mean that consumers are using debt or dipping into their savings account to finance their purchases.
The 1/2 percentage point increase in spending net of income changes is exactly offset by the change in the savings rate.
