From Wolf Richter at wolfstreet.com:
People can easily “adapt to the worst conditions….”
The most important economic entity in the world, the one that every economist tries to decipher, the entity that is supposed to pull the world economy out of its funk with debt-fueled, beyond-their-means, damn-the-torpedoes splurges, has done a lousy job.
The American consumer has been lackadaisical despite, as the EIA gushed, the lowest gas prices “heading into a Thanksgiving holiday weekend since 2008.” Instead of spending that windfall on something else, they have the temerity to save some of it.
So the savings rate, according to the Commerce Department on Wednesday, rose to 5.6% in October, the highest – and for our shocked and appalled economists the worst – level in nearly three years.
“I think this is tied to a decline in economic aspirations,” University of Michigan consumer survey director Richard Curtin told Bloomberg to explain the rising savings rate and the so-so results of the consumer sentiment index that had just been released.
November’s final reading of the sentiment index edged up to 91.3 from 90 in October. While consumers at the lower end of the scale began hoping for wage increases, and thus became more optimistic, those at the top end of the spectrum, accounting for more than half of consumer spending, grew more worried about their financial prospects.
The November reading was down from 93.1 earlier in the month, and was down 7% from January’s 98.1, the post-Financial Crisis peak, when economists had thought that finally, consumers would emerge from the doldrums. And it’s down 15% from 1999. Consumers just don’t feel the old euphoria. Instead, they’ve become, as Curtin said, “increasingly aware of economic cross-currents”:
To continue reading: Consumers Lose Grapple With Reality
