Negative Personal Savings Rate The Norm?

From Smartmoney:
Inflation Eats Up Income Gains in April

Rising prices offset the gains in personal incomes in April, the Commerce Department said Friday.

Personal incomes rose 0.5% in the month, but consumer prices also rose 0.5%. Real disposable incomes (inflation-adjusted and after-tax) fell 0.1%.

Real per-capita incomes fell 0.2%.

Consumer spending increased 0.6% in nominal terms. In real, inflation-adjusted terms, spending increased 0.1%, starting the second quarter off on a weak note.

Core inflation — as measured by the personal consumption expenditure price index, excluding food and energy — rose 0.2% in April, as expected, after a 0.3% gain in March. Core inflation rose 2.1% in the past 12 months, the fastest gain since March 2005.

The increase in the core PCE index was 0.2497%, which rounded down to 0.2%, barely.

With spending rising faster than incomes, the personal-savings rate fell to negative 1.6% in April from negative 1.4% in March. The savings rate has been negative for 11 consecutive months.

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28 Responses to Negative Personal Savings Rate The Norm?

  1. Enjoy the long weekend Holiday at the Jersey Shore !!!

    Long Beach Island… home of the Million Dollar Homes !!!

  2. Richard says:

    surprise surprise. expect the #’s to worsen as persistently high energy and commodity prices continue to feed into the core CPI. the rise in inflation is because companies appear to have done all they can do move work to low wage countries and squeezed every last drop of productivity out of the process. the bogus CPI that uses equivalent rents instead of home prices will also contribute as inflation bleeds into this area.

    the 2nd half of 2006 should see a marked slowdown in economic growth. we’ll be lucky to see 2%.

  3. Anonymous says:

    LBI better known as “Paramus South”
    A parking lot with sand.

  4. pesche22 says:

    you mean paramoose

  5. Anonymous says:

    I think we might see some homes being withdrawn from the market. Only the desperate once will be left and those should be squeezed.

  6. Pat says:

    10 homes pulled from MLS here in PA by Yardley/Trenton recently in one zip. I notice that a few have gone from MLS to local realtor only.

    How could that benefit a seller?

  7. Pat says:

    Oh, by the way, despite decline in real earnings, “saving for a house ain’t that hard..”

    http://money.cnn.com/2006/05/25/magazines/moneymag/down_payment_moneymag_0606/index.htm

    I guess if I don’t buy my lousy 3 scratch off lottery tickets on Wednesday, we can buy that beachfront house we’re waiting for.

  8. pat that link did not work, try to post again please

  9. Anonymous says:

    I rent, and save $25K a year for downpayment. Gives me the flexibility to buy a $250K house in Middlesex county when real estate prices revert to mean….40% lower from here in the next 2-3 yrs.

  10. Pat says:

    Oops..sorry NJResident286 always forget

    tinyurl.com/r339c

    or
    just go to cnn.com, click on business, then real estate.

    I wish somebody on CNN money would profile a two income family with one or two kids, $800 to $1000 a month in daycare, etc., and come up with a miracle plan for saving a 25% downpayment around here. We’ve been brown-baggin’ it for 5 years. I’m sick to death of this crap. And my $1.58 lean cuisine lunches.

    Totally have turned into a Bob fan.

  11. Pat says:

    Anybody have any info or translation for

    http://tinyurl.com/nqr37

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