Report on Income and Spending

This morning's income report confirms what was released in the GDP report yesterday.  Disposable income adjusted for inflation (real disposable income) declined for the third straight month (July, August, September) while spending increased, resulting in a decline in the savings rate to 3.6%, the lowest since right before the recession (fourth quarter of 2007).  Total real disposable income is still about $150 billion below its peak in Spring 2008.  Unless incomes start growing more quickly, it's going to be hard for consumers to significantly increase their spending, thus limiting how quickly the economy can grow in 2012.