Personal savings rate in U.S. hits record low (-0.2%)
interactive.wsj.com
August 28, 2000
Consumer Spending Rose 0.6% in July,
Outpacing Growth in Personal Income
A WSJ.COM News Roundup
WASHINGTON -- Incomes rose modestly in July but spending increased
twice as fast, sending the personal savings rate to a record monthly low.
Personal spending rose 0.6%, the Commerce
Department said Monday. The gain was
slightly faster than the 0.5% expected by
economists surveyed by Thomson Global
Markets. The gain was the biggest jump in five
months.
At the same time, personal income, which
includes wages, interest and government
benefits, grew only 0.3% last month, matching
estimates. Disposable income, which is the income left after taxes, also
rose 0.3% in July, matching the gain posted the month before.
In June, income and spending each grew by 0.4%. The June advance in
spending was revised downward from the 0.5% previously estimated.
Savings Rate Hits Record Low
With growth in spending outpacing income growth, consumers made up
the difference by tapping into savings or by borrowing. The personal
savings rate, which is savings as a percentage of after-tax income, fell to
minus 0.2% in July, the lowest monthly rate since the Commerce
Department began collecting data on savings. It was the first time the
savings rate has been in negative territory since February. In June the rate
stood at 0.1%.
The savings rate may not provide an accurate picture of savings,
economists have cautioned, because it doesn't take into account gains
realized from such things as rising stocks and higher real-estate values.
Spending on durable goods, or big-ticket items expected to last at least
three years, jumped 0.8% in July. That followed a 0.1% drop in June.
Spending on nondurable goods, such as food and fuel, grew by 0.5% last
month, down from a 0.7% increase in June.
The report follows Friday's announcement by the Commerce Department
that showed consumer spending, which accounts for two-thirds of all
economic activity, rose at a 2.9% annual rate in the April-June quarter, the
slowest pace in three years.
But the latest report suggests that consumers opened the third quarter by
spending robustly.
Monday's report contained benign inflation data. The chain-weighted price
index for spending was up only 0.2%, following June's 0.3% increase.
Tight Labor Market
Separately, a survey conducted by Manpower Inc., the nation's largest
outsourcing company, found that U.S. employers' hiring intentions for the
fourth quarter are the strongest in the 25-year history of its quarterly
Employment Outlook Survey.
The fourth-quarter poll of around 16,000 firms showed that "32% plan
employment increases, 7% expect decreases, 57% anticipate no change
and 4% are uncertain."
"The results herald the strongest year-end demand in the 25-year history of
the poll; results for the entire year surpass anything seen previously,"
Manpower said. |
