January 30, 2006
Savings Rates Down
It seems Americans are spending more and saving less:
Americans are spending everything they're making and more, pushing the national savings rate to the lowest point since the Great Depression.
Soaring home prices apparently have convinced people they don't have to worry about saving, a belief that could be seriously tested as 78 million baby boomers begin to retire.
The Commerce Department reported Monday that Americans' personal savings fell into negative territory at minus 0.5 percent last year. That means that people not only spent all of their after-tax income last year but had to dip into previous savings or increase their borrowing.
Not good. I hope no one thinks Social Security will bail them out...
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I think the downward pressure on wages from outsourcing, loss of our manufacturing base, turning into a service economy of McJobs, 60,000 in layoffs at GM and Ford, union membership down to about 14%, and illegal aliens has more to do with this.
If Joe Six Pack America can't make a decent wage, how is he going to have anything left over for saving and investments???
Posted by: Chris at January 30, 2006 09:44 PMPart of the problem may also be that credit is so easy to obtain for many of us (credit card offers that fill up our mailboxes, etc.), that people often don't think twice before charging that new outfit or that dinner out. Also, being in debt used to be considered shameful, as was filing for bankruptcy. For better or worse, much of that stigma is now gone.
Posted by: Pam at January 30, 2006 11:44 PM
