Incomes rose more than forecast in September but a silent stealth indicator says something is wrong
Marla Guthrie
Oct. 30, 2006

Incomes rose more than forecast in September but a silent stealth indicator says something is wrong Federal Reserve's preferred measure of inflation decelerated while income rose more than expected. The savings rate improved to minus 0.2 percent, the best since May 2005, from minus 0.5 percent in August. It shows consumers are eager to take control of their debt than spending money in the mall.

An analytic algorithm that correlates income rise with savings rate has turned bearish for the economy and the stock market. The correlation provides a long-term trend study. A fundamental shift in mentality is taking place. People are very scared about their debt and are thinking about that than anything else.

When the model is combined with slump in house prices, the trend is even more clear. People just want to get rid of all their debts with whatever extra they can earn.

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