Like I said ... the wastrels are adapting in record time.
"Personal saving as a percentage of disposable personal income was 5.7% in April, the Commerce Department said. It was 4.5% in March and 4.1% in February. The 5.7% rate was the highest since 5.9% in February 1995; the personal savings level of $620.2 billion was the largest since records began in January 1959."
Income Rises on Stimulus, Spending Drops
By JEFF BATER
WASHINGTON -- The income of Americans unexpectedly surged in April, elevated by the economic stimulus package, while spending declined and the level of savings increased to the highest in 50 years of records.
Personal income rose at a seasonally adjusted rate of 0.5% compared to the month before, the Commerce Department said Monday. Income fell a revised 0.2% in March; originally, income was seen down 0.3%.
Personal consumption in April fell 0.1% compared to the month before. Spending decreased a revised 0.3% in March; originally, spending was seen falling 0.2%.
Economists surveyed by Dow Jones Newswires forecast a 0.2% decrease in personal income during April and a 0.1% drop in consumer spending. Disposable personal income -- income after taxes -- jumped 1.1% in April.
The stimulus plan, signed by President Barack Obama in February, drove up personal current transfer receipts; it provided an extra payment for the unemployed. Taxes also fell, the income data Monday showed; the stimulus included tax credits.
Personal saving as a percentage of disposable personal income was 5.7% in April, the Commerce Department said. It was 4.5% in March and 4.1% in February. The 5.7% rate was the highest since 5.9% in February 1995; the personal savings level of $620.2 billion was the largest since records began in January 1959.
About a year ago, the saving rate started running higher, with the economy in recession and layoffs mounting. The Bush administration had passed its own stimulus package and people put those payments into savings. Since the recession started in December 2007, 5.7 million jobs in the U.S. have vanished, including 539,000 during April.
Saving money is healthy for households and the economy over time, a path to prosperity. But today's newfound thrift, born of fear, has hurt the economy in the short-term because a dollar saved is not a dollar spent.
Consumer spending makes up 70% of gross domestic product, the broad measure of the economy. Government data last week on GDP showed spending rose a weak 1.5% in the first quarter, after falling 4.3% in the fourth quarter. Aside from layoffs and a weak economy, people are in debt, can't get credit, have taken big hits in the stock market, and watched their home values erode.
The recession has restrained prices -- and even spawned fears of deflation. But a key price gauge in Monday's data crept higher in April. The price index for personal consumption expenditures excluding food and energy, year over year, climbed 1.9%, after rising 1.8% in March. The Federal Reserve watches the index closely for signs of inflation pressures. Fed officials define their statutory goal of price stability as inflation of 1.5% to 2%.
The PCE price index excluding food and energy, or core PCE, increased 0.3% in April compared to March, after rising 0.2% in March. The Labor Department recently released its Consumer Price Index for April, which showed core consumer prices rose 0.3%, driven by a surge in tobacco prices as a federal excise tax kicked in.
The PCE price index rose 0.1% in April compared to March. It was flat in March compared to February. Year over year, the PCE price index rose 0.4% in April, after a 0.6% climb in March.
online.wsj.com |
