American saving rate climbs again
Americans stashed more money away last month, pulling back on discretionary spending amid a cloudier economic outlook.
The saving rate rose for a third month to 3.4% in December, the highest level in seven months, according to Commerce Department data out Friday. Last month’s increase from 2.9% in November marked the biggest jump since July 2021, the report showed.
Savings are creeping back up after steady declines in the second part of 2021 and in 2022 as the economy reopened and Americans started spending again on services – including restaurants and travel.
“The saving rate typically falls late in economic expansions as consumers borrow to sustain spending, then rises as they lose access to credit and turn more cautious on discretionary spending,” Comerica Bank Chief Economist Bill Adams wrote in a note.
Friday’s report also showed real personal spending continued to retreat last month. The decline was led mainly by goods categories, while services spending stagnated.
Home sales rose in December
U.S. pending home sales unexpectedly rose in December for the first time in seven months, wrapping up an otherwise poor year for a housing market battered by higher mortgage rates.
The National Association of Realtors index of contract signings to purchase previously owned homes increased 2.5% last month to 76.9, according to a release Friday. The median estimate in a Bloomberg survey of economists called for a 1% decline.
For all of last year, contract signings decreased more than 20% as demand weakened on the heels of aggressive interest-rate hikes by the Federal Reserve. Consumers’ views of homebuying conditions are hovering near historic lows, based on University of Michigan survey data.
From wire reports