Income, Spending, and (Lack of) Saving

This morning the BEA released its figures for personal income and spending in September.

Personal income increased $15.1 billion, or 0.2 percent, and disposable personal income (DPI) increased $9.0 billion, or 0.1 percent, in September, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $49.8 billion, or 0.6 percent.

The most striking thing about this report is the effect of a strong rise in consumption with such weak income growth: savings are scraping rock-bottom.

Personal saving as a percentage of disposable personal income:

Feb: 0.9

Mar: 1.0

Apr: 1.4

May: 0.9

Jun: 1.4

Jul: 0.4

Aug: 0.7

Sep: 0.2

There can be no pickup in economic growth until incomes start growing at a healthy rate. Whoever wins the election tomorrow is going to face a rough economy next year, I fear.