April 2, 2012 (Bloomberg) – Consumers loosened their grip on their wallets in March as personal consumption spending jumped by 1.1%, according to the Commerce Department.  Since spending is a major driver for the U.S. economy, that’s good news in context of the recovery from the recession that has plagued global economies since 2007.  Consumers awakening from their slumber explained a large part of why GDP continued to grow last quarter despite a lack of government stimulus.

Yet today’s report also reveals that personal incomes only increased 0.4% over the month.  How did spending rise more than income?  Savings fell by 8.9%.

Saving has now declined every month of 2012.  From January through March, it’s down 32%, or $139 billion.  Meanwhile spending is up $154 billion, while incomes are only up $92 billion.  This shows that throughout 2012, less saving has made up much of the increase in spending.

Is this reason for alarm?  Yes and no.  It’s no secret that Americans don’t save enough.  As perpetual consumers, their saving as a percentage of disposable incomes shrunk to just 1.4% in 2005 – a time of economic prosperity.  As the recession hit, that changed.  Suddenly, people feared economic uncertainty and began keeping more of their income and making fewer frivolous purchases.  Reverberations of this newfound reticence to spend were felt far and wide, from shopping malls to ballparks, and more.  Virtually every sector was touched.

Consequently, savings peaked in 2009 at 5.4% of disposable income in the second quarter, the highest reading since 1998.  Since the high, however, the rate has declined to just half that figure.

Clearly, Americans are reverting back to the kind of spending they did prior to the financial crisis – instead of staying at the 5%+ level seen in the 1990s.  And it’s not just Americans dipping into their wallets; numerous foreign economies are receiving a boost from an increased willingness to spend on the part of consumers.  In Japan, for instance, personal consumer spending has shot up 3.9% since the start of the year.  Indicators point to this trend continuing in the short-term despite fears that an aging population will threaten Japan’s ability to domestically finance its debt.

Some had hoped that the recession might have caused a permanent shift in Americans’ attitudes about saving.  Anyone with that view would surely lament today’s news.  It appears that the culture of spending has returned.  Yet anyone who wants the economy to recover more quickly might be happy: if there’s any time when the economy needs spending, it’s during an economic recovery.  As consumers stimulate the economy, growth should continue and unemployment will begin to decline.