According to the U.S. Bureau of Economic Analysis, the American economy capped off its 2014 spring season in fine form. We made more, spent some of it on cars, and still saved $620 billion for a rainy day.
Personal income rose $58.8 billion, or 0.4%, taking American incomes 1.9% higher year to date. These gains owe to near-equal parts higher employment and rising wages.
And American workers are spending some of these larger paychecks, too. Personal-consumption expenditures took a break in April but popped back to a 0.2% increase in May, worth $18.3 billion. Year to date, that's a 1.2% total increase.
More than half of the spending gains came from the auto industry. By contrast, motor vehicle spending was at a standstill in April.
This trend also showed when the automakers themselves reported May numbers earlier this month. General Motors (NYSE:GM) sold 285,000 vehicles in May, up 12% from its April showing. Ford (NYSE:F) moved 253,000 units for a 20% increase. Third-largest American vehicle-seller Toyota Motors (NYSE:TM) reported a 22% increase to 243,000 vehicles. These sales increases are large enough to move the needle for the American economy, not to mention set the automakers up for a strong earnings season in July.
But the spending gains pale in comparison to the rising savings rate. Americans socked away 4.8% of disposable income into bank accounts and investment vehicles, up from 4.5% in April. In other words, out of some $17 trillion in total disposable income, $620 billion was earmarked for savings.
"Consumers are spending on cars but not on much else, instead boosting their savings," said macro economist Gus Faucher of PNC Financial Services. "Consumers have increased their saving and paid down their debt, and so are in a position to spend more as the labor market continues to improve."
The American economy is getting healthier every month -- and consumers are boosting their savings balances in a downright Foolish manner. None of these improvements come in shocking single-serving spurts, but in sustainable long-term trends.
Long story short, America is doing better. If this report contained any signs of an upcoming downward correction, I sure don't see 'em.
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Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days.