Incomes in the US got a big boost from federal stimulus dollars in May, the Commerce Department reported today. But weary consumers stashed most of that lucre away, sending the savings rate to a 16-year high. “Households are reverting to a more sustainable spending path vis-à-vis income,” one economist told the Financial Times.
Incomes jumped 1.4% in May, adding $167.1 billion to the economy. That doubled the 0.7% rise the month before. But with home prices and jobs continuing to dwindle, the hoarding is likely to continue. “Until there is meaningful and sustained improvement in labor market conditions, there will be no significant, sustained rebound in consumer spending,” said another economist.