Us consumers in February spent like drunken sailors — but the cash came from savings and not from increased wages so some on Wall Street feel the goods times can’t continue to roll according to the NY Post report.
“It’s definitely not sustainable,” said John Lonski, chief economist with Moody’s.
The Commerce Department said spending in February rose 0.8 percent, higher than expected, while incomes increased just 0.2 percent.
The spread between the two figures dropped the savings rate 14 percent to its lowest point, 3.7 percent, in 30 months. Without savings, consumer spending can quickly fall if costs — such as gas prices — spike.
On the bright side, consumers appeared to be buoyed by the improving labor picture and by the warmer spring weather.
“Nicer weather might make consumers more inclined to buy big-ticket items,” said Lonski. Lonski predicts the more bullish aspects of the US economic picture will win out. He said spending will continue to climb, albeit at a lower rate. Savings, Lonski added, will continue to grow rather than drop.
Read more: http://www.nypost.com/p/news/business/shaky_spree_for_all_QtZ94sdMA3dKWRMQniue4I
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