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Everyone says higher saving
rates are needed. Just not yet - please...?"
"STOCKS SEESAW as savings rate jumps," said the AP on Friday,
amending its earlier "Stocks decline" headline to try and fit the
moves to the news, rather than the other way round.
Either way, reckon the
newswires, "Investors are nervous because consumers are saving more than
they're spending."
But if it really was the 15-year
high in US personal savings rates - way up at 6.9% of gross income - that
spooked investors, just wait until Wall Street gets down to crunching Uncle
Sam's give-and-take in the latest Commerce Dept. figures.
And heaven forbid the Chinese
take a peek at US consumers' earnings...
Falling below zero for the first
time since 1960 or earlier, nominal US wages have fallen off a cliff
in the last six months.
Gross income earned from
employment has fallen year-to-date each month in 2009, dropping in May to its
lowest level since Oct. 2007 and down more than 2% from the peak of last
August.
So how come consumers spending
AND saving both rose last month, while pay packets shrank?
"Obviously, for the long
run, it has been desired for decades that Americans save more," said one
fund manager to Reuters from Illinois.
"But in the midst of this recovery [sic] and the stimulus packages that
have been put forward, the hope would be to have them spending the money
now."
And there's the devil in the
detail: the government stimulus.
The Bureau of Economic
Analysis's Personal Income & Outlays release shows government benefits
last month hitting a record both in Dollar terms and as a proportion of gross
personal earnings, rising above 17.9% of income across the economy.
For comparison, Uncle Sam's
donation to US
personal income peaked at 14% during the early 1990s recession. The
five-decade average is 11.1%.
Unemployment insurance benefits,
meantime, were almost twice the Dollar volume in May of October last year. And
yet the Street's apparently worried by US citizens putting too much money
aside, rather than by how much Washington's stepped up to support them.
Still think the fiscal or
monetary stimulus will make for the exit any time soon...?
Adrian Ash
Head of
Research
Bullionvault.com
All
articles by Adrian Ash
City
correspondent for The Daily Reckoning in London,
Adrian Ash is head of research at www.BullionVault.com –
giving you direct access to investment gold, vaulted in Zurich, on $3 spreads and 0.8% dealing
fees.
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