Posted on 12/20/2003 5:39:43 PM PST by riri
WASHINGTON (Reuters) - As an economist, Beth Armington, 41, knows the value of saving money for the future, and she puts money aside from every paycheck for retirement.
But as a divorced mother of two a week before Christmas, she's thrilled with the sale at Hecht's department store.
"Hecht's is practically giving it away," she said as she browsed the upscale store. "I can buy five different presents for my kids but spend only half as much as last year."
With small children, a "huge mortgage" and a nanny to pay for, Armington echoes the sentiments of many Americans fighting to set aside some cash after all the bills are paid.
"I buy now and sort it out later. That's what credit cards are for," she said with a laugh.
The consumer culture has pushed America's personal saving rate to record lows in recent years and to among the lowest in the developed world, a situation seen by many economists as one of the most serious structural weaknesses in the economy.
"Clearly if you look at the bankruptcy rate, the (payment) delinquency rates, there are some worrisome signs," said Wells Fargo chief economist Sung Won Sohn.
The government revealed last week the dearth of savings is worse than first thought. Revised Commerce Department data showed Americans saved just 2.3 cents from every dollar earned after taxes in 2002 -- not the 3.7 percent previously reported and less than a third of the 7.7 percent saved in 1992.
While the falling saving rate does not take into account wealth accumulated through rising property values or stock portfolios, it compounds the problem of the burgeoning budget deficit being chalked up by the government.
"I don't know of any other major economy with a savings rate as low as ours," said Sohn. "Take Japan, for example. The government runs huge budget deficits but the consumers save so much that not only can they take care of their own budget deficits, but they take care of quite a bit of ours as well."
America borrows $1.5 billion a day from foreign investors to cover its consumption and lack of savings, and the daily total could hit $2.5 billion by 2005, Sohn said.
That flow of funds fattens the yawning current account and trade deficits and makes it increasingly difficult to convince foreign investors, already awash in U.S. assets, to buy more -- which in turn weakens the U.S. dollar.
"It's kind of like if you already have three cars and I want to sell you another car, I may have to cut my price by half to interest you," Sohn said.
It's a vicious circle that could lead to higher interest rates and threaten vital economic growth, explained Jade Zelnik, chief economist at RBS Greenwich Capital Markets.
"If foreigners feel the U.S. isn't the most attractive place to invest, then ... interest rates are going to have to rise to attract investment," Zelnik said. "That will not be good for the U.S."
The aging population won't help, she noted. While the baby boom generation is now in its peak savings years, the trend will soon reverse direction as boomers leave the work force and start drawing on retirement savings.
But the low saving rate is not all bad news. American spendthrifts have helped pull the U.S. economy out of the 2001 recession and, at least in the short term, should help to keep growth strong as consumer confidence in the recovery builds.
"This year was the first year I felt my finances were in order," said Jenae, a 36-year-old lawyer shopping in downtown Washington who declined to give her last name. "I'm spending much more than usual -- it's been a very selfish year."
The solution is in the statement.
In other words as a selfish self-absorbed person who has kids as social tools who is living beyond her means in a Mcmansion of some sort and now trying to buy the affection she from her kids because will not bestow it directly, she is willing to take a chance that her kids life will get worse down the road when the piper comes to call for his payment.
Ah, she'd just spend that too. (though I agree with the premise that it should be hers to spend)
I love that statement. Never heard it but it so aptly applies to so many I know.
But the important thing is that, years from now, this woman's children will not remember or care what she made and the toys she bought them - they'll remember whether she was being a real mom.
A greater gift and legacy cannot be bestowed.
But as a divorced mother of two
I could do the whole, you know what happens when you assume thing but, it's Christmas time so I won't.
You are wrong. She is a divorced mother of two, meaning that she's likely soaking her ex to pay for the nanny.
God, you are so right, sink. Men never do the divorcing. Get a grip, would you? And, the term 'nanny' was not in quotes. In case that part escapes you, it means it was inserted by the journalist, not the mother in the piece.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.