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At the end of September, the Bureau of Economic Analysis released U.S. data on income and spending for August for Q2’22.
U.S. incomes were revised down slightly and spending up moderately. The net result of lower incomes and higher spending is less savings. The implication here is that the estimates of “excess savings” for households is both smaller and being drawn down faster than previously thought.
“Excess savings” is defined as above-trend savings that happened early in the pandemic.
The current version of the data shows that the stock of excess savings has been drawn down by about a third, whereas the previous version indicated it was more like a tenth.
With excess savings being drawn down at a rapid rate, we’ll see how quickly consumer spending will hold up, which only grew 0.4% in August.
Until next time,
Paul Cerro | Cedar Grove Capital
Personal Twitter: @paulcerro
Fund Twitter: @cedargrovecm
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