Text size
Three numbers to start your day:
Average American’s Personal Savings Rate Hits 10{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} for July
That is according to new data from the Bureau of Economic Analysis. That is after excluding all the temporary support coming from the government.
It’s down from a peak of 22{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} in April, when consumption had collapsed thanks to the virus. Since then, consumer spending has grown 17.5{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, while income excluding temporary programs has grown less than 2{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.
But spending is still depressed relative to underlying income because of heightened consumer caution. Before the pandemic, the average American’s savings rate was a little less than 8{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}.
U.S. Trade Deficit in Capital Goods Hits $16 Billion Per Month
That was the figure for July, excluding motor vehicles. The value of American exports of high-end manufactured goods has consistently been about 30{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} lower than the value of imports since April.
Part of the explanation is that a large chunk of U.S. capital goods exports consists of airplanes, aircraft engines, and other parts. As passengers have avoided flying and airlines have cut their budgets, aircraft manufacturers have taken the hit.
But the other side of the story has been the remarkable rebound in imports, which are only 3{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} below the pre-pandemic level. The U.S. ran roughly balanced trade in capital goods until 2015.
Investors Nervous About Market Volatility
The difference between implied and actual stock market volatility has been bigger than it is now only 0.2{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of the time, according to an analysis from Tallbacken Capital Advisors. By this measure, investors are extremely nervous.
Options prices reflect how much investors are willing to pay for protection against swings in stock values. Expensive options mean that investors are worried, while cheap options mean they are calm.
Usually, the riskiness of stocks implied by options prices moves in line with whatever has just happened. But sometimes there are divergences. The markets were calm in August, but investors are nevertheless paying up handsomely for protection in case things get worse in September.
Numbers by Barron’s is our daily podcast. Find out more here.
Write to Matthew Klein at [email protected]