Just one week after the US Department of Commerce quietly slashed historical US capex spending by billions of dollars following a major data revision…

 

… it was time for another major revision to a series that is nearer and dearer to most Americans’ hearts, namely Disposable Personal Income.

As we noted earlier, today’s Personal Income and Spending report revealed that personal spending in April surged by 1%, or the most since August 2009 driven in part by a major jump on energy goods and services.

 

Also driving the rebound was increased spending on motor vehicles and parts (+5.1% v. -1.4%) which was the largest 1 month gain since March 2014 (+6.0%).

However, what was far more notable, were the prior revisions to US personal saving which saw the March print, already the highest since 2012, spike from 5.4% to 5.9%.

 

It was only the April spending surge that pushed the savings rate back to what until last month was a three year high.

But what prompted this major revision higher in savings? As it turns out, the US government decided to revise how much spending power Americans have (recall personal savings is simply personal income less personal spending) and as part of today’s report it announced the following revision:

 Estimates have been revised for October through March.  Changes in personal income, in current-dollar and chained (2009) dollar DPI, and in current-dollar and chained (2009) dollar PCE for February and for March — revised and as published in last month’s release — are shown below.

Estimates of wages and salaries have been revised for October through March.  The revision to fourth-quarter wages and salaries reflected the incorporation of the most recently available Bureau of Labor Statistics tabulations of fourth-quarter wages and salaries from the Quarterly Census of Employment and Wages.  Revised estimates for January, February, and March reflect extrapolations from the revised fourth-quarter level of wages.  In addition, revisions to February and March reflect revised BLS employment, hours, and earnings data.

And, as shown below, the revision occurred because according to the BEA Americans were notably richer over the past 6 months, specifically instead of a personal income of $13,719 billion as of March 31, Disposable Personal Income was revised to $13,792, a number which since jumped to $13,855 billion. In other words, according to the US government, Disposable Personal Income was just over $70 billion higher.

 

Which is odd, because despite the dramatic upward revision in persona income, personal spending remained unchanged, suggesting US consumers were even less willing to go out and part ways with their hard-earned money.

Indeed, as shown in the chart below, the upward revision to personal income took place even as the spending series remained unchanged. The variance over the past 6 months between the original and revised series is shown below.

 

We can only hope that Americans are “grateful” for this surprising discovery that US consumers as a whole had over $70 billion in “disposable income” hiding under the mattress, as a result of this revision. Then again considering the ongoing deplorable reports by retailers, which indicate that US consumers are spending the least in years, one wonders if the BEA did not accidentally also forgot to revise the cumulative change to diposable income with the wrong sign in front of it.

Luckily, there is an easy way to confirm this latest BEA revision: if retail spending, as reported by the actual store CEOs and not the government’s own seasonally adjusted number, does not pick up look for this latest upward revision to be promptly, and very quietly, revised far lower in the coming months.


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