I may have mentioned on more than one occassion: I am not an economist. However, there are some numbers that are just not adding up.
On one hand, this sounds good: at the end of the June, the US Commerce Department reported that consumer spending rose during the month of May by 0.4 percent, after a 0.7 gain in April.
The government reported Thursday that the overall economy raced ahead at an annual rate of 5.6 percent in the January-March quarter, the fastest pace in 2 1/2 years.
So this means people are earning more, and thus spending more.
Yet on the other side of the coin, the Federal Reserve reports that consumers took on $4.4 billion more in debt in the same month.
Credit cards and other forms of revolving debt jacked up the overall number. U.S. consumers added $6.7 billion in revolving debt in May, up 10% from the prior month to a total of $812 billion.
And then, there is this factoid:
Americans’ personal savings rate, the amount of saving left from disposable income, dipped to a negative 1.7 percent in May, down from a negative 1.6 percent in April. The savings rate has been negative for 12 consecutive months, meaning that Americans are dipping into savings or borrowing more to finance a spending level that is exceeding their after-tax incomes.
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- Foreclosures are up. Way up.
- Proactive v. Reactive: Start Talking
- How Are You Spending Your MLK Holiday?
- IRS Form 1099-C: Discharged Debt is NOT Income
Tags: Bankruptcy, Economy