Economy & Policy

America the thrifty. Well, that was short-lived

By Barbara Kiviat | March 29, 2010 | +

“The New Frugality,” declared the cover of Time magazine on April 27, 2009. Just kidding!

The latest figure on the personal savings rate, out this morning from the Bureau of Economic Analysis, show that America’s new-found love of saving money is shaping up to be short-lived. Back in May 2009, we were saving a nearly respectable 6.4% of our disposable income. Plenty of people made bold declarations that this would be the new normal, that we might even make it as high as 8%.

Or maybe not. The savings rate has been dropping fairly steadily since last summer, as you can see in the above chart, from Calculated Risk. The chart shows a three-month trailing average in order to smooth out the data. Today’s new number, for the month of February: 3.1%. That’s down from 3.4% the month before, and 4.0% the month before that.
Related Topics: savings rate, spending, thrift, Economy & Policy

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  • http://www.rodgermitchell.com Rodger Malcolm Mitchell

    Somehow “saving” is thought to be good for the economy. But the measurement of “saving” is suspect. Saving is income minus taxes and spending on goods and services. Most people really don’t know what saving means.

    Do you “save” when you:
    1. Bury your currency in a tin can in your back yard?
    2. Deposit your money in your bank savings account or in your money market account?
    3. Purchase Treasury bills or bank CDs?
    4. Purchase guaranteed-interest, whole life insurance?
    5. Purchase stocks and bonds?
    6. Purchase real estate?
    7. Purchase a business?
    8. Purchase your primary residence?
    9. Purchase a secondary residence?
    10. Purchase a rental residence?
    11. Purchase a car for your business use?
    12. Purchase a car for your personal use?
    13. Purchase a computer for business and for personal use?
    14. Purchase food and clothing?

    Which of these benefits the economy and which doesn’t?

    Rodger Malcolm Mitchell

  • economicsfordemocrats

    Savings is another suspect statistic! The highest savings nation has been Japan for several decades. They have also been in a recession/depression for decades. As measured by GDP, another suspect statistic.

    Savings (&investing) by individuals and families is very important to build assets for retirement or other future needs. This is not the macro definition!
    Mark S. Pash, CFP

  • http://senekaross.wordpress.com senekaross

    Let America be always thrifty.
    Personal Savings would save Americans, but not their nuclear God…:

    http://www.docstoc.com/docs/32032984/China’s-Nuclear-Warhead

    -

  • http://japan-russia.jimdo.com/freedom/?title=forex parakori

    Americans must think about their own America. Which is placed in North America continent, but not somewhere in Europe or Afghanistan or Iraq.

    In this case , probably, US America would live longer… then Ancient Rome Empire

    CIA report into shoring up Afghan war support in Western Europe :

    http://docstoc.com/docs/31972387

    .

  • waltwriston

    I totally agree! It seems like one day these so-called learned economists say Americans aren’t saving enough, but then about 3 hrs later Americans aren’t spending enough. Which is it? Also agree on GDP on a lot things like say healthcare it isn’t a net benefit it’s a net drain. I personally like Herman Daily’s way of measuring GDP.

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