Consumer spending rose .9% in March netting an overall positive response from the mainstream media, with many reports now calling recession fears unfounded. But consumer credit card debt also rose to all-time highs again, meaning people borrowed the money they spend to fund their consumerism.
March’s consumer spending increase was the largest in nearly a decade, according to a report by PBS. While consumer spending accounts for 70 percent of economic activity, there’s more ill-fated news hidden in these newly released numbers. Incomes grew by 0.1 percent in March while inflation rose 0.2 percent (notice inflation rose more than incomes) and has risen only 1.5 percent over the past 12 months, far below the Federal Reserve’s 2 percent target for inflation.
The March gain was the biggest monthly increase since August 2009, the Commerce Department reported Monday. That’s a marked improvement after three months of lackluster readings in this key segment of the economy. But based on the credit card numbers, much of that increase in spending was with borrowed money, fueling an already precarious debt situation in the United States.
Credit card balances rose $3 billion in February, and now totals $1.06 trillion, the Federal Reserve reports. Its annualized growth rate was 3.3 percent. Total consumer debt (which includes student loans and auto loans, as well as revolving debt) was up $15.2 billion to $4.05 trillion, making for an annualized growth rate of 4.5 percent.
Consumer spending fueled by debt could be good or the overall economy, however, it’s not good for the average everyday American. Considering the Fed loves to jack up interest rates when the larger picture (the U.S. macroeconomy is booming) the measly wage increase won’t likely be enough to cover what was borrowed in order to spend in March.
PBS further reported that Americans savings rate fell also, likely because consumer spending rose. With the big rise in spending and the small increase in incomes, the household saving rate fell to 6.5 percent of after-tax income in March, the lowest level since November when it was 6.2 percent.
Some of the increases in spending, lower savings rates, and rising revolving credit could be attributed to the Fed’s announcement that they’d be holding off on any more rate hikes in 2019.
That picture at the top describes a lot of people where I work, LOL. The same holds true for people for everywhere. People go out and spend money they don’t yet have for stupid things and then wonder why the hell they can’t make ends meet. They don’t know how to get their priorities straight. I always take care of bills first and wait til’ I have enough money saved up to get what I want and/or need. No credit card debt or any other kind of debt for me. My prepping comes first for me and I don’t let anything take away from that. There’s something to be said about being debt free.
TDR, I guess I’m the choir here. Like minds and all that. I looked at the pic and thought much the same. That chick typifies so much that’s wrong with this nation. Her type will be found on every street-corner or whatever red-light location that exists post-SHTF. For her only real skill or worth is just that…. if that. Known too many like her. Hell, my whole neighborhood has her breed up and down the block.
Heartless, you and I are on the same page in the same book. We’re both in the same choir and I know there’s others. At least my neighborhood has some sensible people in it. I wouldn’t even try to date someone like that girl in the picture. I might catch something, LOL.
Yeah, like you might catch bankruptcy. What’s the divorce rate again? Must be nice to have 3 income streams and no job…
“Pass the duchie on your left hand side.”
The three most dreaded words in the English language are “Pay me now!”.