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US Savings Rate Surges To Highest Since 2012 As Consumer Save "Gas Price Drop" Instead Of Spending

Following December's worse than expected drop in personal spending (and slowing groweth in incomes), analysts wewre expected the usual hockey-stick bounce... it did not happen. Despite all the exuberance over low gas prices, US personal spending dropped 0.2% in January - twice as bad as the 0.1% drop expected and the 3rd miss in a row. The spending drop was driven in large part by a slide in non-durables. Personal income also missed excpectations, rising just 0.3% (against a +0.4% expectation) hovering at its lowest growth since September. The savings rates surged to 5.5% - its highest since Dec 2012.

Spending drops again and misses for 3rd month in a row...

 

The reason for the drop? Continuing declines in non-durable spending, as a result of lower gas prices.

 

As is clear from the right hand side - the gap (savings) is widening

 

As the savings rate jumps to its highest since 2012...

 

Not what Yellen wants to see, because what the above data suggests, at least until its revision is that US consumers - waiter and bartender "recovery" notwithstanding - are saving the "gas tax cut" instead of spending it. Time to call the Keynesian police and instite a few executive orders or better yet, start punishing US savers just like in Europe.