Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.
Fear not, a minimum wage increase is on the way. That will resolve this minor inconvenience
Today’s report showed a price gauge tied to consumer spending, which are the figures tracked by Federal Reserve policy makers, was little changed in January from the prior month. Over the past 12 months prices rose 1.2, the smallest year-to-year gain since October 2009. The rate compares with the central bank’s goal of 2 percent. Excluding food and energy costs, prices climbed 1.3 percent in January from the same month in 2012, the smallest year-to- year gain since April 2011.As Denninger likes to point out, stable prices are no change, not a targeted 2%. It is easy to see why they exclude food an energy, as it is a negligible expense, right?
wouldn't a 1.2% inflation rate, and only a .2% advance in consumer household spending, EXCLUDING fuel and food, yield a net decline in consumption? A growing economy should have growth rates exceeding inflation. This is coupled with large decline in savings.
The saving rate dropped to 2.4 percent from 6.4 percent.Translation: inflation on the rise, people spending less, and still running out of money. If something doesn't change this trajectory, there is going to be some serious issues.
There is an interesting debate shaping up over at VP on money, it's value and inflation.