Spending, income data encouraging
TEXT OF INTERVIEW
STEVE CHIOTAKIS: Right now we’re gonna ask the big question. It comes as the government posted some encouraging personal spending and income numbers. The Commerce Department today said spending was up 0.4 percent in August. And incomes rose half a percent. Both numbers better than expected. Jill Schlesinger is editor at large for CBS MoneyWatch and she’s with us as she is every Friday, live from New York. Good morning, Jill.
JILL SCHLESINGER: Good morning.
CHIOTAKIS: Didn’t we get a consumer confidence report
earlier this week — tell me if I’m wrong here — that was really low. How do we square this consumer spending report that looks not so bad?
SCHLESINGER: Well you know, it’s amazing. The Conference Board said the Confidence Confidence Index dropped to the lowest level in seven months. But you know what, for years, this index has been a pretty poor indicator of consumer behavior. That’s why this Income & Spending Report is so important. It reflects what people actually do, not what they say or how they feel. And the difference between the income and spending number means that people actually have a little bit of extra money to save.
CHIOTAKIS: So what people say and do are two different things? OK.
SCHLESINGER: Yes.
CHIOTAKIS: I want to talk about savings. Why are people saving more money? I mean, this is a downturn, right? They have more money to save?
SCHLESINGER: Well, you know, it’s interesting. Remember when — the early 80s, our parents were telling us that they saved every dime of every dollar they made. They really did. Savings rate in the early 80s was 12 percent. It went negative for a couple of months in the mid-2000s. But the Great Recession has really shaken some sense into Americans, brought us back to the basics. They’re paying down their debt, they’re rebuilding their savings. And you know what, though, they’ve got a long way to go. We’ve got some reports that retirement savings are underfunded. But at least we’re in the positive territory. We’re rebuilding towards that 10 percent number. Just do what your parents say. Save the dime of every dollar you make.
CHIOTAKIS: Jill Schlesinger, a pretty optimistic report there then, you think?
SCHLESINGER: Absolutely.
CHIOTAKIS: All right. From CBS MoneyWatch. We appreciate it.
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