Consumers still spending less than they earn!

Since the early days of the blog, and the Great Recession, I have been saying that I hoped the U.S. consumer would be weaned from his/her spend thrift ways.  For way too long consumers spent more than they earned.  But the data for most of 2010 have consistently shown a consumer doing the reverse.  That is, folks are actually saving money, on balance.

The U.S. Department of Commerce reported this morning that consumer incomes rose 0.5% last month.  While, consumer spending increased only 0.4%.  Additionally, saving was recorded at a level of 5.7%.

Analysis: For a change, I think the data tell almost the entire story.  U.S. consumers even as the economy is stablizing and slowly improving, still have not reverted back to their old spending habits.  The savings rate is strong and healthy.  Amen!

Importance grade: 7.5; while it’s nice to see the continued conservativism of the U.S. consumer.  I still don’t feel there is enough data in to definitively declare the U.S. consumers’ return to rational spending.  The environment that will exist when the unemployment rate is around 8.5%, instead of its current 9.6%, will prove to be a more relevant testing ground for consumer spending and saving.

Jason