Consumer spending surged at a nearly 10% annual rate in
June reflecting strong auto price promotion and sales.
The savings rate fell to 0.0%. With money funds in the
2.8 -3.5% area, there is no incentive to save when the
real return on these funds is negative after adjusting
for taxes and inflation of 3.0%.
This is another reminder that short rates need to rise
significantly further to start to regain a better
balance between consumption and savings.
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