Spending down, savings up

Isn’t this what the Asians and Euros have been preaching should happen in the US? We should spend less and save more. Well, now we’re doing just that. How’s that working out for ya?

Personal spending fell 1% while income fell 0.2%. The US savings rate rose to 3.6% versus 2.8% in November.

Inflation was up 0.6% y/y and nil for the month at the headline level according to the PCE deflator, the Fed’s favorite inflation measure, and up 1.7% y/y at the core level.

EUR/USD dipped initially on the data which shows US consumers are continuing to retrench. It has since rebounded to the 1.2760 level, little changed from before the data.