The rich get richer, the rest hunker in the bunker
Incomes didn’t increase for the first time since September and the savings rate increased to the highest level in a year.
The savings rate increased to 6.4 percent last month, the highest level since June 2009, to $725.9 billion.
The government’s income revisions solely reflected better dividend payments, which only affect wealthier households, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York.
“The entire increase in the savings rate is attributable to the wealthier part of the population,” Bandholz said in a note to clients yesterday. “It is, therefore, a measure for the rising inequality of income and wealth in the U.S.”
Demand may take time to improve as the unemployment rate hovers near a 26-year high, shaking confidence in the economic recovery.
“Consumers are still hunkered down,” Ryan Sweet, a senior economist at Moody’s Economy.com Inc. in West Chester, Pennsylvania, said before the report.
SuperValu Inc., the operator of the Albertson’s grocery-store chain, said last week that fiscal first-quarter food sales fell compared with a year earlier and consumers purchased fewer items per basket.
“We see huge increases in coupon usage across our enterprise,” Chief Executive Officer Craig Herkert said on a conference call July 27.
“We continue to see as you all know, massive unemployment but also underemployment and particularly in some of the big markets where we are, it’s certainly more challenged than in the country as a whole.”
Labels: Consumption based economy