Savings down, but investors feeling bullish?

posted at 8:30 am on March 31, 2012 by Jazz Shaw

In the unlikely event that you somehow didn’t win half a billion dollars last night, you may have to get back to thinking about your retirement plan this morning. The eggheads at Business Insider continue to track the economic trends across the nation, both current and historical. (If you don’t remember where you’ve been, it’s hard to anticipate where you’re going.) So with Spring having finally arrived, how excited should investors be entering the season of April showers? Looks like it may be raining Benjamins.

From Barclays’ Jordan Kotick, it turns out that April is the best month for the Dow in turns of the mean return.

By other measures, like probability of a gain, and mean return, it’s not too shabby either.

april investments

But at the same time that Wall Street may be getting ready to push their chips in, individual savings is going in a different direction. After seeing a very encouraging surge during the hard times of 2010, personal savings are simply tanking this year.

For February, the savings rate of Americans fell to 3.7%, from over 4% in the month before.

We’re not quite at housing bubble levels, but the cushion is definitely getting thinner.

Personal Savings 2012

People saving less money is bad, right? Well… not so fast. On the one hand, conservatives tend to think in terms of personal responsibility and self-reliance. Saving money against a rainy day, for your kids’ college, for your retirement… these are all admirable traits in theory. But in reality, past trends tell us that personal savings is more a sign of a lack of faith in the economy and the government. It’s more panic savings than planning savings.

But when people are feeling more upbeat about the future and less worried about their own personal position, they tend to spend more and save less. Sad but true. So April may turn out to be another month of optimism in the market, on both Wall Street and Main Street. The only question now is, can the actual economy deliver in line with these expectations?

The preceding information was provided by BI’s own Joe Weisenthal. If you disagree or need more information, you are invited to Ask Joe a Question. (Since God only knows I can’t explain this stuff.) Or you can just follow him on Twitter.


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blowing bubbles bicycling backwards

WryTrvllr on March 31, 2012 at 8:40 AM

glad April is good month for the stock market.

my car fix-it man told me yesterday that he fixes many cars where payment comes from Social Services. ??? He doesn’t bill social services directly, but the client gets the $ from Social Services.

meanwhile, I still pay my own bills. stupid, huh?

kelley in virginia on March 31, 2012 at 8:48 AM

Why do I get the feeling all that “savings” is going towards food and gas.

lowandslow on March 31, 2012 at 8:52 AM

2.9% inflation rate my ass.

lowandslow on March 31, 2012 at 8:53 AM

kelley in virginia on March 31, 2012 at 8:48 AM

there was an article in the NYT about the longest serving flight attendant in history. He is like 75 or something. Anyway, he gets to choose his own flights so he picks the super long haul ones to hawaii to fulfill his hour log.

He gets paid over 100k a year in SS, pension and salary. I didnt know you could get a pension while you were still getting a salary. must be nice…

peachaeo on March 31, 2012 at 9:02 AM

Any bullishness in the market is in ANTICIPATION of the forced abdication of Emperor Hussein I next January. I’ve been saying this for over a year now, the more it becomes “perfectly clear” that he’s an one termer, the economy will actually BEGIN it’s natural rebound from recession.

Also keep in mind it’s looking very likely that Obamacare is going into the dumpster removing ANOTHER huge drag on business.

wildcat72 on March 31, 2012 at 9:05 AM

2.9% inflation rate my ass.

lowandslow on March 31, 2012 at 8:53 AM

Exactly. This is because reporting REAL inflation (and unemployment) in the late 1970′s brought down Jimmy Carter. So the bureaucracy ALTERED the way both numbers are reported. Unemployment numbers (as we have seen) can be easily manipulated because they can leave out as many unemployed as the bureaucracy wishes to.

Same with inflation. They now call it “core” inflation. Which eliminates such “core” expenditures as FOOD AND FUEL. Anyone tried living their lives without buying those NON CORE items on a weekly basis?

wildcat72 on March 31, 2012 at 9:08 AM

Wall Street is the only thing that has recovered under Obama.

Go figure, huh?

ButterflyDragon on March 31, 2012 at 9:11 AM

Wall Street is the only thing that has recovered under Obama.

Go figure, huh?

ButterflyDragon on March 31, 2012 at 9:11 AM

The Obama Regime has sure busted the old assumption that Wall Street fat cats were all capitalist free market Republicans hasn’t it?

Nope, they are just as willing to go full commie in exchange for crony “sure thing” windfalls granted by our thin skinned Emperor.

wildcat72 on March 31, 2012 at 9:13 AM

Maybe the investmnt community recognizes the fact that we’ve been printing funny money for several years now and keeping the cost to the banking community/business borrowing/and variable mortgages at zip,in order to hide the real Obama/Bush depression level unemployment till after the election.

Buy your personal commodities now, because the rampant inflation that must come to pay for this Obama re-election money- manipulation game, will out inflate even Carter’s 12.8% and a prime at 21.

As we said back in the Carter days,”buy tuna fish and tuck it under the bed” Don’t do that with gasoline – or something other than inflation will explode. Oh, and vote for a small government man/woman -but you won’t find one in either party, I’m afraid.

Don L on March 31, 2012 at 9:14 AM

Pumping a few trillion into the stock market hasn’t hurt Obama or the Democrats since “the bill” is to be paid at a later date. Expect one more QE by the FEDS before November rolls around to keep the market inflated, (along with the Dems campaign coffers).

Rovin on March 31, 2012 at 9:14 AM

Sell in May, go away.

Seth Halpern on March 31, 2012 at 9:26 AM

Why do I get the feeling all that “savings” is going towards food and gas.

lowandslow on March 31, 2012 at 8:52 AM

Yep.

And mortgages, loans, etc…

This is not a mutually exclusive event. It ties directly into unemployment. People who have run out of unemployment are taking part time work plus personal savings.

budfox on March 31, 2012 at 9:40 AM

Any bullishness in the market is in ANTICIPATION of the forced abdication of Emperor Hussein I next January. I’ve been saying this for over a year now, the more it becomes “perfectly clear” that he’s an one termer, the economy will actually BEGIN it’s natural rebound from recession.
wildcat72 on March 31, 2012 at 9:05 AM

I have thought this way myself, but didn’t know if it was just wishful thinking on my part. The market is perhaps forecasting having hope returned soon.

lynncgb on March 31, 2012 at 9:40 AM

Even more distressing from yesterday’s economic report was that for the second month in a row real disposable personal income FELL by .1% following a .2% decrease in Jan. And these numbers assume an inflation rate of around 3.6% which most people would laugh at as being too low.Personally I think it’s somewhere between 5-8%. So in reality the decrease in DPI is much larger. This is where the real pain is..that people are falling further and further behind.

galtg on March 31, 2012 at 9:41 AM

Why do I get the feeling all that “savings” is going towards food and gas.

lowandslow on March 31, 2012 at 8:52 AM

…exactly! Food is way more, gas is way more, utility bills are way more, etc. Are people getting similar raises at work?

KOOLAID2 on March 31, 2012 at 9:41 AM

Our raises were small this year – average for the “salary pool” was 2.5%.

freywg on March 31, 2012 at 10:10 AM

DonL and Rovin haved just about covered it all. When the interest rates go up and they will watch the deficits sky rocket,the dollar takes another plunge and stagflation returns.We are really screwed.Thanks to Obama,Reid and Bernanke.

celtic warrior on March 31, 2012 at 10:11 AM

Bad news for Real America.

KeninCT on March 31, 2012 at 10:12 AM

Don’t know about Wall Street and publicly traded items, but in Texas private investment is WAYYYYY up. I personally know about $ billions being invested right now by less than 20 private investors and all of it is CASH. No banks, commercial or otherwise are involved.

Kermit on March 31, 2012 at 10:29 AM

Proceed with caution. Some market folks think that the ramp in equities over the last three months has been the sole work of institutional investors made possible by the horribly low volume, in an attempt to draw back in the retail investor, who’s fled the market.

Goldman screams it is a generational buy, Larry Fink goes all in stocks, Notorious BIGGS is 90% long, anchors on comedy-financial fusion channels are channeling the producer in their earpiece and screaming at the teleprompter to “sell bonds and buy stocks”, even as stocks are at their highest in nearly 5 years and… what happens? In the latest week, ICI just reported that domestic equity retail funds just saw another $2.9 billion outflow, the 4th consecutive in a row, and the 23 of out 27 outflows during the entire parabolic blow off top phase the market has undergone since October, and instead put another $9 billion in fixed income funds “soaring” yields be damned.

And in another post Zero Hedge adds:

Yup – the banks are so loaded up with toxic stocks that they have NO CHOICE but to keep the ramp accelerating higher and higher until “stupid” retail comes back in and distribution happens, leaving the retail investor holding the hollow bag again. Alas, there were no inflows this week either. Which means that just like Italian banks, the meltup could well accelerate even more from here.

I don’t even pretend to know what’s the correct investing path. I don’t have enough “extra” money to invest. But be careful, a lot of people seem to get real upset when the arrows turn from green to red.

Weight of Glory on March 31, 2012 at 10:32 AM

Do you really have to be some kind of economics expert to realize that millions of Americans have less money to save since they have to spend more every week just to get by? Why would they think that any kind of a small uptrend in 2010 could possibly be a harbinger of happy days ahead?

I can guess…wishful thinking, they’re Libtards, they’re down with crony capitalism/corporate fascism…

The entire capitalist system is changing irrevocably, like it or not, and choose your culprits/scapegoats, but it just is.

Dr. ZhivBlago on March 31, 2012 at 10:40 AM

Bad news for Real America.
KeninCT on March 31, 2012 at 10:12 AM

Home alone in New Haven.

Chuck Schick on March 31, 2012 at 11:09 AM

read zerohedge.com

the market is being artificially inflated to create the perception that the economy is improving.

buy gold, ensure you have things you can barter when the paper money economy collapses, arm yourselves so you can protect your life and property.

olesparkie on March 31, 2012 at 11:14 AM

So much whiting about economy improving. Such are the always jealous and bitter conservatives.

lester on March 31, 2012 at 12:21 PM

*whining

lester on March 31, 2012 at 12:26 PM

So much whiting about economy improving. Such are the always jealous and bitter conservatives.

lester on March 31, 2012 at 12:21 PM

Why would we be jealous? We’re the 1%

Chuck Schick on March 31, 2012 at 12:33 PM

So much whiting about economy improving. Such are the always jealous and bitter conservatives.

lester on March 31, 2012 at 12:21 PM

Name one policy your pole smoking president has pushed that has truly aided the economy.

tom daschle concerned on March 31, 2012 at 1:13 PM

The reason I tend to be somewhat dubious as to this being an actual recovery, is mainly that it doesn’t LOOK like a recovery.

Usually when the economy recovers, you can clearly see it being driven by a handful of sectors within the economy. For example, our last recovery was largely driven by housing and construction. This time I see no clear economic drivers, there is a little tiny bit of growth in several sectors and together they result in something measurable, but thats really not the same thing.

Another area of concern is spending. Most economists tend to look at consumer spending as a good thing, but it looks like most consumer spending right now is being directed at essentials like fuel and food. Consumer good purchases look fairly anemic, and I’m pretty sure people aren’t spending more money on gas because they feel good about the economy.

And yes, household debt is a concern as well, because it comes at a time when household payrolls are shrinking. Take a look at tax receipts this year, they’re lower than they were last year despite the slight drop in the unemployment number. This suggests to me that in the past year we’ve lost high paying jobs and replaced them with low paying service jobs. That isn’t the end of the world, at least until it hits a certain point, but it does mean that more households are less capable of dealing with external strains on their finances. This is why less savings is an area of concern here, to be blunt, I rather doubt its just a coincidence that household debt popped back up the moment gasoline prices went crazy.

WolvenOne on March 31, 2012 at 1:16 PM

And yes, I do want the economy to recover, but I want it to be an honest recovery that stands an excellent chance at lasting.

WolvenOne on March 31, 2012 at 1:18 PM

Bad news for Real America.

KeninCT on March 31, 2012 at 10:12 AM

Ballerina baboon!!!!

WryTrvllr on March 31, 2012 at 1:19 PM

My personal theory is irrational exuberance in an early anticipation of real “change” in November.

Difficultas_Est_Imperium on March 31, 2012 at 1:26 PM

Weight of Glory on March 31, 2012 at 10:32 AM

BINGO!

Not to mention when you measure equities against the dollar, this level is the equivalent of a 9000 or so DJIA in 2008.

Devalue the dollar, it takes more of them to buy the same thing, prices rise. Whether it’s equities, groceries, or gasoline.

Quantitative easing. Obamanomics, Bernankenomics, whatever you want to call it.

Adjoran on March 31, 2012 at 3:33 PM

I remember reading about a guy who predicted market returns, pretty accurately, by using the number of people turning 49 that year. If there were many, the market went up–at 49 everybody thinks, OMG I’ve got to start saving/investing for retirement!

PattyJ on March 31, 2012 at 5:11 PM

Alternatively, it could mean that people are having to spend their savings because they’ve been unemployed so long.

Jeff A on March 31, 2012 at 5:19 PM

Any bullishness in the market is in ANTICIPATION of the forced abdication of Emperor Hussein I next January. I’ve been saying this for over a year now, the more it becomes “perfectly clear” that he’s an one termer, the economy will actually BEGIN it’s natural rebound from recession.

Also keep in mind it’s looking very likely that Obamacare is going into the dumpster removing ANOTHER huge drag on business.

wildcat72 on March 31, 2012 at 9:05 AM
I’ve said this too for a while now. A few months after Obama began his presidency was such a low point in this nations history. I see a ray of hope in our future.

newportmike on March 31, 2012 at 5:45 PM

Big Brown Bear bought the big one. Shucky darn for the benevolent blue bull.

WryTrvllr on March 31, 2012 at 10:10 PM

actually….. brought on the big one

WryTrvllr on March 31, 2012 at 10:12 PM

Maybe more of it is going into the mattress or other “hard assets” where it’s a little more difficult to measure.

Pole-Cat on March 31, 2012 at 11:04 PM

baby

WryTrvllr on March 31, 2012 at 11:19 PM

There are lots of places to bury one’s “Assets” Ms. cat.

WryTrvllr on March 31, 2012 at 11:30 PM

But the principles of investing always aply.

WryTrvllr on April 1, 2012 at 12:20 AM

apply

WryTrvllr on April 1, 2012 at 12:21 AM

BUMP!!!

WryTrvllr on April 1, 2012 at 1:02 AM