Stock Ownership Rate Collapses

One way to support consumption is to sell your stocks. Many did just that.

A May 2017 Gallup survey shows U.S. Stock Ownership Down Among All but Older, Higher-Income.

Here's the Gallup question: Do you, personally, or jointly with a spouse, have any money invested in the stock market right now -- either in an individual stock, a stock market fund, or in a self-directed 401(k) or IRA?

Ownership Distribution

Heading into retirement, only 54% of those 65 or older own "any" stocks, down from 62% in 2008.

The stock ownership rate of those making less than $75,000 plunged 13 percentage points to 54%.

I suspect the 50% line is near $70,000. Those making less struggle to save.

Also, note the disturbing rates for blacks and Hispanics.

Revolving Credit

In January, revolving credit made a new record high.

Image placeholder title

Meanwhile, the personal savings rate has plunged.

Personal Savings Rate

Image placeholder title

I posted that chart on Friday in Personal Savings Rate: What's Going On? Can Spending Drive the Economy?

Undoubtedly, the wealth-effect of housing boosted spending just before the great recession.

I believe a similar thing is happening now.

Personal Savings Definition

Personal saving is defined as personal income less personal outlays and personal current taxes.

Definition Exposes Problem

The definition lumps all the income and all the outlays comes up with a savings rate of 2.6%.

It's falling but at least it's still positive, on average.

However, that revolving debt is not evenly spread. It is concentrated in the bottom half of the population which goes further and further into debt to support consumption.

A 2017 Holiday Shopping Report shows that in November of 2017, 24% of millennials were still paying down credit card debt from Christmas of 2016.

Image placeholder title

​An increasing percentage of people struggle to save anything as credit card debt soars out of sight.

Yet, former Fed Chair Ben Bernanke tells us there is a "saving glut".

Yeah, right.

Mike "Mish" Shedlock