Consumer spending propped up our weak economic numbers long enough to get President Obama through the election – which is one reason that he used to treat his “payroll tax cut” raid on Social Security funding as the most important #60Dollars in every American’s life, before suddenly and silently dropping it during the fiscal cliff showdown. That’s all over now, as Bloomberg News reports that consumer spending held up through the holiday season, but cratering personal incomes forecast dark times ahead:
Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.
Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.
Employment gains, the rebound in housing and growing demand for autos will probably keep supporting consumer spending in the first quarter as the world’s largest economy picks up from an end-of-year slowdown. Even so, rising gasoline prices and the need to rebuild nest eggs may make it difficult for households to match last quarter’s performance.
“Employment gains?” Sure, whatever, guys. Last time I checked, the workforce was still “poised for recovery.” Things probably will pick up eventually. Good thing nobody’s dumb enough to kneecap job creation with huge tax increases on job creators and investors, or make everything more expensive for the embattled middle-class consumer by raising the minimum wage!
Remember, it would be extremely rude to complain about this, because only the government is allowed to wail hysterically about being asked to make do with a little less.