Will consumer debt kill the recovery?

The chart above shows two series: first the amount of consumer loans outstanding at commercial banks (CCLACBM027SBOG, black line) compared to the personals savings rate (GPSAVE_PC1, blue line), while the grey vertical bar illustrates The Great Recession; some observations are apparent.

First, consumer loans apparently surged immediately after the Great Recession, jumping 65% [...]

Spooked consumers are saving …

The growth in job creation has all but flatlined, while the expanding labour force has pushed unemployment rate up and fully 80% of Americans have directly experienced unemployment or known someone who has been unemployed during The Great Recession, and the canaries in the coal mind are sending signals we’d best not ignore.

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Savings and Personal Income oh my !

Interesting news about recent increases in consumer spending but where is the money coming from? The chart above shows savings (GPSAVE, black line) compared to disposable personal income (DSPI, blue line), sampled monthly and calculated as percentage change from a year ago, over the period 2002 to 2012. The savings rate has clearly collapsed [...]

Is the savings rate really surging?

US Personal Savings Rate, rolling one year average in %, 1960 to 2012

The media seems to be making a lot of noise recently about the US personal savings rate, specifically how recent increases have “taught Americans a lesson” after The Great Recession began in August 2007. I’m not so sure about that. The [...]