Shocking Discovery Reveals Everyone In The US Is Now $500 Billion Richer Overnight

A startling revelation has surfaced in the wake of the revised Q2 GDP data released by the Bureau of Economic Analysis (BEA). As part of the release, the Department of Commerce, led by Gina Raimondo, reported an unexpected upward revision of GDP numbers since 2020. This came as a surprise to many, particularly banks such as Goldman Sachs, which had anticipated a significant downward revision to historical GDP numbers.

The discrepancy between Gross Domestic Product (GDP) and Gross Domestic Income (GDI) has been a subject of discussion for quite some time now. GDI, which captures various interest payments, had been diverging from GDP, sparking concerns among economists and analysts. In September 2023, JPMorgan had predicted that GDP would eventually catch up to GDI, resulting in a much weaker GDP print. However, the Biden administration intervened with a last-minute revision to historical data, making it appear as though the US was stronger than previously thought.

Fast-forward to the present, and Goldman Sachs is left once again bewildered by the revised GDP numbers. Despite anticipating a downward revision to historical GDP numbers, the Department of Commerce had other plans. This time around, GDI was revised sharply higher, effectively closing the gap between the two series by boosting various interest income assumptions.

Further inspection of the revised Personal Income and Spending data reveals a telling story. Personal income was revised upward by approximately $800 billion, resulting from an increase in government handouts, interest and dividend income, and a significant $293 billion cumulative increase in wages and salaries. This drastic revision led to a whopping increase in Disposable Personal Income, up from $21 trillion to $21.8 trillion.

Spending also underwent a revision, albeit less drastic. The August number for Personal Outlays was revised higher by approximately $350 billion, reflecting a reduction in spending on goods offset by a substantial increase in spending on services. Disposable personal income was revised 3.8% higher to $21.8 trillion, while personal spending was revised by about half that, or 1.7%, to $20.7 trillion.

The difference between the revised personal income and spending paints an intriguing picture. By subtracting the revised personal spending from the revised personal income, we get the revised savings of US consumers. Almost overnight, Americans suddenly found themselves wealthier, with revised savings rising from $600 billion in July to $1.1 trillion in August.

The revised personal savings rate reveals an equally astonishing trend. Rather than plummeting to a near-record low, as had been predicted just last month, the revised data suggests that US consumers are much healthier than initially thought. This fortuitous revision has provided the administration with a springboard to tout the US economy's strength, even as the average American struggles to make ends meet.

This unexpected turn of events has far-reaching implications. With record credit card balances and dwindling personal savings, many had predicted an impending recession. The revised GDP numbers, however, have provided the administration with a convenient alibi to deflect concerns about the nation's economic well-being.

As we inch closer to the elections, the revised data serves as a useful tool for the administration to trumpet the economy's resilience. It remains to be seen, however, whether this apparent surge in savings will have a lasting impact on the overall economy or if it's merely a short-term placebo. One thing is certain, though – the US consumer, despite struggling with record debt and decreased purchasing power, has been 'suddenly' made significantly wealthier on paper.