Economic Data Are Cooling Off
Economic news, which had been coming in better than expected, now seems mixed at best. This morning, the Bureau of Economic Analysis released data indicating that consumers' incomes and spending for November barely grew and that aggregate wages actually fell. We also learned from the Census Bureau that for the second month in a row, companies are investing less in their businesses. And earlier this week, the Chicago Fed's composite of 85 economic indicators showed that growth is slowing and below trend.
Let's start with consumers, in the form of the Personal Income and Outlays report. Black Friday hype aside, real personal spending grew by just 0.2% in November. And that was possible only because consumers saved less, as real disposable incomes were basically unchanged. And aggregate wages and salaries fell by 0.1% in nominal terms. The savings rate fell from 3.6% to 3.5%, a trend that is unsustainable, as a healthy savings rate is in the range of 8% to 10%. This is especially true when you consider that Americans need to save for a looming retirement and that household net worth fell by 4.1% in the third quarter, according to the Federal Reserve's Flow of Funds report....620 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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