U.S. savings rate falls again as consumer spending rises
Consumer spending last month grew faster than people’s take-home incomes as households cut their savings rate a bit to support their purchases of cars and other goods and services.
The government said Friday that the personal saving rate — the percentage of after-tax income that’s not spent — fell to 3.5% in November from 3.6% in October. As recently as June, the rate was 5% after being consistently at about that level or higher since late 2009.
The drop in the savings figure reflects two factors: more purchases by consumers that they had held off making during the shaky recovery, and a weak recovery in household income amid persistently high unemployment.
There are indications that job growth may be picking up, and the House’s approval Friday of a temporary extension of a payroll tax cut and federal unemployment benefits will help support spending. What’s more, consumers are finding it a little easier to get credit.
Still, many families are constrained by low wage gains, a depressed housing market and still hefty, though pared down, personal debt. And that all points to less-than-robust spending in the near term.
In November, when the retail industry raved about record sales over Thanksgiving weekend, the month actually turned out to be ho-hum in terms of overall spending.
The Commerce Department’s report Friday said personal consumption rose just 0.1% in November for the second straight month. Meanwhile, after-tax income dipped less than 0.1% last month from October.
Personal consumption in November was up 4.3% from a year earlier, while after-tax income last month was up just 2.4% from November 2010.
“Consumers will not lead the recovery on a consistent basis,” Scott Hoyt, an economist at Moody’s Analytics, said in a research note Friday. “They simply do not have the resources.”
— Don Lee in Washington