Both March Income and Spending rose as expected, up .3% and .6% respectively. With the greater rise in spending, the Savings Rate fell to 2.7% from 3% and has now fallen to the lowest since Sept ’08. Because of a .1% rise in the PCE price deflator, real income was up .2% and real spending rose by .5%. The drop in the savings rate and increase in tax refunds has helped consumer spending over the past few months at the same time income growth and job hiring has been muted so in order to sustain, we need the latter to take the baton from the former. Government policy, whether thru zero interest rates or cash for clunkers, cash for appliances, cash for caulkers, and the home buying tax credit do not encourage savings unfortunately but these fiscal incentives are about to fully expire. Who knows when Fed monetary policy will encourage savings? Net-net for the markets, this data was mostly included in the GDP report on Friday so won’t be market moving.