Figures released by the Commerce Department yesterday shows that consumer spending rose for the 5th straight month. Stocks and commodities around the world rose today with the news, as supposedly this is further proof that the American economy is back on its feet and running.
And that sounds great and all, but what about this little nugget of information tucked far into the article?
Because spending rose and incomes were unchanged, the savings rate fell to 3.1 percent last month, the lowest level since October 2008.
Consider that again: Stock markets around the world rallied today, and the DJIA rose yesterday on the news that American consumers spent more in February. Yet, the savings rate plummeted. This is the cause for celebration. Also consider that the savings rate fell to the “lowest level since October 2008.” And what was the savings rate in October 2008? Dismal. Absolutely dismal.
The American federal government is basically broke. Kaput. The States are in virtual bankruptcy and individual debt is through the roof. Yet, we are told the recovery is around the corner because Americans are spending more and taking on more debt. Excuse me if I don’t put on my party hat.
But money is being spent, it’s coming from somewhere. But where?
More than 7.4 million home loans nationwide are in some stage of delinquency or foreclosure, with another 1 million properties either bank-owned or sold out of foreclosure. An incredible 10% of all U.S. loans are delinquent.
That’s a lot of money NOT being spent on mortgages or loan repayments. I suppose the not-being-paid-mortgage-money can and is being spent elsewhere. Hell, if I didn’t have to pay $1500.00 on the mortgage at The Manor each month, I suppose there would be no reason why I couldn’t afford that spiffy new IPad.
This Friday the US jobs report will come out and there will be somewhere in the neighbourhood of 160,000 jobs that were created last month, and I’m sure Monday will be a banner day on the stock market. Just as it would be if the US lost 160,000 jobs. We’ll once again be told that the economic recovery is well under way and that good times are here again. You won’t be told that between immigration and people entering the workforce every month, that the US needs to create about 150,000 jobs just to keep the unemployment rate steady. Nope. 160,000 jobs will be proof that Obama’s policies are stimulating the economy. No mention that under his watch, 6 million jobs have been lost.
We’ve been told since the start of The Greatest Economic Downturn Since The Great Depression (TGEDSTGD)™ that banks, businesses and consumers need to purge themselves of debt. Debt was the noose around our collective necks. But now that that doesn’t fit the narrative, debt isn’t so bad after all and personal savings aren’t something to worry about. You would think that with this sudden reversal of thought that there must be an election around the corner, or something.