Here's A Totally Reasonable Explanation For Why The Personal Saving Rate Is Tumbling

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	Here's A Totally Reasonable Explanation For Why The Personal Saving Rate Is Tumbling Earlier today, we learned that personal spending jumped by 0.9% in March as personal income climbed by 0.5%. Because spending outpaced income, the personal saving rate slipped to 3.8% from 4.2%. The saving rate is now at the lowest level since January 2013. So, have the American consumer lost it? "I do think one thing people are missing is that the drop in savings over the last year or so is not really surprising," said Renaissance Macro's Neil Dutta in an email to Business Insider. "The wealth ratio is rising (inverted in the chart). That is, households are seeing their financial and real estate assets rise faster than income. When that happens, households feel better about the world and draw down their rates of precautionary saving. Just because households are not using their homes to extract equity, they are a bit more comfortable bringing their rates of saving down, especially now that the bulk of household deleveraging is behind us." Just this week we got confirmation that home prices were still rising and we also saw the Dow close at a new record high. Read »

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