Higher Income and Higher Saving Supports Strong Spending
\n\nLast week’s revisions to household financial data help solve one of the persistent mysteries of the last year: why has consumer spending been so resilient despite gloomy consumer sentiment?
\n\nPart of the answer is job security. Jobless claims, which are a proxy for layoffs, have run at their lowest year-to-date levels since 1969. The unemployment rate has been at or near the Fed’s longer-term estimate of maximum employment. We’ve added more jobs this year than needed to keep up with the growth of potential workers.
\n\nThe latest data from the government point to another factor: American households have been saving substantially more than the official figures previously indicated.
\n\nThe Bureau of Economic Analysis’s annual revisions raised estimated personal saving by an average of $322 billion over the 12 months through July. That is an increase of approximately 39 percent from the previously reported figures. To put it in technical economic terms, that is massive.
\n\nPreviously, the official estimate for annualized saving averaged about $836 billion during those 12 months. The revised estimate is approximately $1.159 trillion. Households were retaining considerably more income after taxes and spending than the earlier accounts suggested.
\n\nThe…
Original source: https://www.breitbart.com/economy/
