01 March 2006

Consumer Spending Outpaces Personal Income

Consumers once again spent more than their incomes in January.

Personal incomes rose 0.7% in January, but spending rose 0.9% meaning consumers spent all of their raises and then some in January. That, in and of itself, isn't entirely bad. However, coupled with the fact that we were already at a negative savings rate, that means consumers were spending more of their savings in January.

This is not sustainable. The fact that it hasn't happened since the Great Depression should be the first indication of that. People need to save, otherwise they'll be sorry once their savings are depleted and they just can't have that plasma screen they NEED RIGHT NOW!

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