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."
"divorced mother of two" is not in quotes either. Are we to assume that she's not a divorced mother of two, just because the journalist says she is?
Any divorced mother of two who can afford a nanny ain't in bad shape, economically.
And, she's likely using child support to pay for it, no matter who initiated the divorce.
Calm down.
Then the other nice poster's point is well made -- it is possible for a divorced woman who is getting child support to stay at home -- that is the theoretical intent and I *know* that any guy paying child support (again -- remember the words "nanny" and "huge mortgage") is, as you so accurately put it, getting soaked.
Career over kids.
Any divorced mother of two needs someone to watch her children while she works.
And, she's likely using child support to pay for it, no matter who initiated the divorce.
Child support is different than 'soaking' her ex. Or do you disagree?
Yes, yes -- I missed that operational word. But it makes the whole piece peculiar.
Sure it is. In some freaky dream world or the land of the Rockefeller's.
You know that any guy paying child support is getting soaked? My father paid child support for us. Yet, he didn't think he was getting soaked, as you so eloquently put it. He thought he was doing what he should to help take care of his children. Not all fathers regard their children as monetary liabilites. Here's hoping you don't have children.
Child support is often "soaking the ex," especially in cases where the woman initiates the divorce. In fact, "soaking the ex" is often the reason for the divorce. So, yes, I might disagree.
And yet you had no compunction whatsoever about replying about her. Evidentally, not learning the facts before speaking isn't just a democrat problem after all.
Is every woman you meet evil?
What an unkind thing to say. My complaint is with people who do not maximize their time with their kids and who sacrifice their kids on the altar of career. I already admitted to knee-jerking on the "Nanny" word -- it brings up a different image than "baby-sitter." If I was wrong in this case, my philosophy stands.
My mom was also divorced and not from her decision. She worked night and day to keep us fed and sheltered -- but she always somehow made herself available when needed (with 7 kids I have no idea how she did it -- but she died young so I think it took its toll).
I guess my feelings on this are aligned with Dr. Laura.
Are you on the rag? PMS, maybe?
My question makes as much sense as yours.
Someone else must have helped take care of you, though. Nothing in this piece says this woman isn't there for her kids. Back to your mom and mine, wouldn't you hate for someone to assume they weren't there for us even though we knew they were, just because someone read something into it? We don't know this lady. We don't know her circumstances or children or ex-husband. This just barely touched on her life, not even barely, less than that. All I'm saying is, she could be our mothers. We don't know, so let's just let the woman be.
Indeed.
Merry Christmas.
:)
Wouldn't occur to the Maoists at Reuters to write:
Child support is not often soaking the ex unless you think your kids aren't worth taking care of. And, if you think that soaking the ex is often the reason for divorce, then you must think most women you meet are evil. Obviously you think money is the only thing most women are after.
As far as your other comments go, you are far cruder than I ever perceived you being. You say divorce happens because women want to soak their husbands for money. I say that may be true in some cases but more often than not it's because they're married to someone as classless as you.
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