THE BASIS POINT

U.S. Consumer Sentiment on Eve Of Our Independence

 

One week ago the Personal Income & Outlays report came out showing that consumers have been making a bit more and saving quite a bit more—we’re actually saving the most since records started 50 years ago. Of course this affects spending and as you can see from the charts below, spending has been anemic in recent months. This is the very crux of economics—you need spending to keep a healthy economy, which is the chatter you tend to hear a lot more now. But the chatter we always heard during the long economic boom was that American’s don’t save enough. Perhaps it’s too confounding for Independence Day BBQ conversation, but one thing is certain: when financial independence is at risk, people don’t spend as much, and it’s hard to argue that this is a bad thing. Cheers to our country’s independence and to our economic recovery—even if it means you have to go out and buy more stuff you don’t need.

Spending vs. Income

Income, Spending, Savings

 

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