Savings Rate Surges To Highest Since 2012 As Spending Disappoints

The Keynesians will not be pleased. Despite the holiday season, December spending disappointed with no change MoM (0.0% vs +0.1% exp). This is further sentiment-destructive as income data rose more than expected MoM (+0.3% vs +0.2% exp) even as income growth YoY slipped to its weakest in 9 months.

Perhaps most sadly of all, 42% of December Personal Income gains came from Government Social Benefits, mostly Social Security and Medicare. Vive le recovery.

Spending on Goods, both durable and non-durable, tumbled by $34.6 billion offset by $33.9 billion jump in spending on services. This was the biggest drop in Spending since Jan 2015…

Even as spending on Services such as Obamacare remained resilient:

Widening the Spending to Income gap:

Which of course means the personal savings rate rose, pushing to 5.5% – the highest since 2012.

… Which is hardly what the PhDs in The Eccles Building are demanding or their textbooks are: remember a consumer who is saving is one who is not doing his Keynesian duty to spend and “grow” the economy.