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Personal Saving Rate
Households emphasized saving over spending in May according to the Personal Income report from the Bureau of Economic Analysis. Personal income surged by a robust 1.4 percent thanks to one-time stimulus payments of $250 to individuals receiving Social Security and other retirement benefits. Consumption, however, increased by just 0.3 percent. As a result, the personal saving rate increased to 6.9 percent of disposable personal income, its highest level since December 1993. Retailers are doing everything they can to entice consumers to part with some of their recent income gains, and indeed they had some success in May as consumption was positive. But overall, it appears that U.S. consumers are not going to lead the economy out of recession, at least not by themselves. They will need help from China and other emerging markets where recovering economies will create demand for U.S. goods and services, thereby boosting exports. For commercial real estate, this translates into a sluggish recovery for retail properties and perhaps a bit of a tailwind for the industrial sector. |
by Bob Bach, Senior Vice President, Market Analysis
© 2008 Grubb & Ellis Company |
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