Americans Bought More Cars in May and Still Saved $620 Billion

Slow but steady, American wages are rising in 2014. The newfound cash is mostly spent on cars -- and squirreled away in savings accounts.

Jun 26, 2014 at 3:57PM

Fool Flickr Chevy Tahoe
Armed with growing paychecks, Americans bought plenty of new cars, trucks, and SUVs in May 2014, such as this handsome Chevy Tahoe.

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.

Fool Flickr Fat Stacks

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.

Take advantage of this little-known tax "loophole"
Looking for ways to make the most of your savings? Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report, "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

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.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers