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."
No. Some are. None of the women in my circle have, yet, decided to "find themselves" and take their husbands to the cleaners.
Obviously you think money is the only thing most women are after.
It's what some women are after, and they find that they can get it through divorce much easier than working for it.
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.
I've been married 26 years. You're awfully defensive, SD. You been divorced?
I too am retired as of Oct. 31st and I have had to adjust my spending habits downward. I still slobber over ads in the paper, but I don't spend. I look, and that helps me get it out of my system. It has to be a REAL GOOD SALE for me to shell out my bucks.
Good Lord, it's not really that bad! I've known one or two chicks who don't fall into that pattern. No, really!
Only insomuch as I hate to call myself a conservative and then find myself aligned with people such as yourself that take one sentence from a paper and make a person out to be something your little mind has manufactured them to be for no other apparent reason than you are either bored or drunk.
You been divorced?
Not that it is any of your business whatsoever but no, I have not. Now try to rationalize.
Neither. This is Reuters you're reading. If interest rates are low, savings will be low, so Reuters writes articles about the low savings rate, and says it's bad.
The "vicious circle" they refer to, also known as "the market," will eventually cause interest rates to rise if there is insufficient savings to meet demand. But Reuters will not write articles about how the saings rate is going up. They will write articles saying that high interest rates choke the economy.
Reverse all this stuff if there is a Democrat in the White House, of course. Then all this same stuff is good. When Democrats are in, high spending rates do not mean low savings and talk of doom. Instead those are "boom times." If interest rates rise under a Democrat, it means that savings and investment have never been better.
I hope this helps clear things up.
I'm neither, but I do find it fascinating at your overreaction to my opinion. It's good that you're not divorced.
Maybe I should have asked if you're married. It could be that, with your attitude, men have steered clear of you.
If you want to continue with the insults, let me assure you, I can go on all night.
Hahaha!
In PA, it's not out of sight yet. YET!
"Taken to the Cleaners" wasn't invented out of thin air.
"It's cheaper to keeper" works too.
Folks tend to put money where the risk is acceptable and the rate of return is the highest. Savings accounts are not the best place to stash cash. Savings accounts are for more liquid smaller sum assets.
I have friends who think they to a course in college on how to screw your ex husband while having fun.
I'm just lucky my wife (26 years) has been able to tolerate my nonsense all this time without going to court.
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