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Americans Dip Into Personal Savings - |

Americans Dip Into Personal Savings

Personal Spending Increases as Personal Savings Fall

The latest personal spending and savings data continues to highlight that American household budgets are feeling the strains of inflation and unemployment.  We have seen personal savings drop from 6.1 percent of disposable personal income to 5.8 percent in February. Clearly the American consumer is  uncertain whether to continue saving for the next crisis or getting the latest Apple iPad.

We have seen record commodity prices in 2011 forcing consumers  to use savings for basic essentials.  Bubbling inflation highlights the need to curb spending and initiate a savings plan.  Household spending increased from a revised 0.3% to 0.7% with  personal income falling  from a revised 1.2% to 0.3%.  Not a common occurrence after Christmas is out of the way. Maybe they were buying the new iPad2 or iPhone.

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Gasoline continues to press new highs further adding to personal savings pressure. How far will consumers dip into their personal savings beyond bare essentials? Personal spending increases continue to pressure household budgets. This was reiterated in a speech by the Feds Lockhart following the household spending and savings report. Earlier in the month the Fed’s Fisher and the ECB’s Trichet voiced their concern on inflation.

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