Sustainable economic growth doesn't come from consumer spending, government deficit spending, or printing money. It comes from SAVINGs AND INVESTMENT. Savings comes from income growth. Unfortunately, consumer spending is coming at the expense of savings drawdowns, which points to its lack of sustainability.
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reuters.com
INCOMES LAGGING
Tepid income growth as the labor market struggles to gain speed also threatens to undermine spending, which is an even more important pillar for growth than usual given signs that businesses are cutting back on investment.
While personal income last month grew 0.4 percent, the most since March and a step-up from August's 0.1 percent gain, the amount of money at the disposal of households after inflation and taxes was flat.
That meant households had to cut back on saving to fund purchases. The saving rate slipped to 3.3 percent last month, the lowest since November 2011, from 3.7 percent in August.
"We have only seen two lower readings on the savings rate in the recovery, which suggests that the consumer has virtually no cushion to absorb the scheduled tax hikes at the beginning of 2013," said John Ryding, chief economist at RDQ Economics in New York. |
