Posts Tagged ‘spending’

The alarming increasing in the saving rate … say, what?

August 29, 2012

One of the drags on the economy is that folks have tried to deleverage – i.e. pay down debts – and are saving more.

Recently, I’ve seen several articles talking about the “alarming” spike in the savings rate.

Strikes me as odd since, in the past, saving was considered a good thing (you know, savings is what funds investment which drives the economy) …  and there was hand wring that folks were spending like drunken sailors and weren’t saving enough.

Hmmm.

Here’s a glance at the numbers …

Yes, the savings rate has been increasing since troughing around 2005.But – and it’s a big BUT – the saving rate is still about 5 points lower than it was in the 1970s and 1980s … when there was concern that we weren’t saving enough.

So, if you think the current rate is alarming, expect to be more alarmed as we bounce back to the old normal.

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