Posted on 02/01/2009 2:04:52 PM PST by Steelfish
Americans' saving more, spending less By MARTIN CRUTSINGER AP Economics Writer Published: Sunday, Feb. 01, 2009
WASHINGTON -- Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time.
Economists call it the "paradox of thrift." What's good for individuals - spending less, saving more - is bad for the economy when everyone does it.
On Friday, the government reported Americans' savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago.
Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.
The downward spiral has hammered the retail and manufacturing industries. For years, stores enjoyed boom times as shoppers splurged on TVs, fancy kitchen decor and clothes. Suddenly, frugality is in style
(Excerpt) Read more at sacbee.com ...
With the “messiah” and his band of Obamacorns running around saying that it’s going to get a lot worse before it gets better, who in their right mind would want to take on any debt right now. Oh crap, I forgot! THE U.S. GOVERNMENT! OF COURSE!
How about - I don’t trust the government or financial institutions any longer, since they’ve displayed their arrogance and contempt for the ‘common man’.
Bank of the Metal Box in the Closet is more appealing to me than another financial institution going under.
Perhaps one reason that we are spending less and saving more is that the dingbats that gave all the deadbeats their money are pulling it in a bit.
Just asking for a 5% down payment on a house pretty much pulls all first-time home buyers out of the spending category for years (as they try to save up some money).
It’s happening now, finally.
It was Keynes himself who called it “the paradox of thrift.”
If we want people to save more, then perhaps we could give them a little incentive to save — such as a savings interest rate that barely exceeds the rate of inflation?
But no, the Federal Reserve has seen fit to crater rates down to negligible levels, while at the same time bemoaning the low savings rate.
On second look the bailouts and stimuli will succeed for those who want them the most. They will hamstring the economy and drive it into decline and hyperinflation which should generate demands for the government to save us all from the capitalists with "sensible" and total socialism. They know what they are doing, just as FDR knew what he was doing. Socialists neither need nor want prosperity. They want control and equality, equality for the subject population.
Well, for the record, my wonderful DH pointed out to me just last week that I seemed to be doing MORE than my share of stimulating the economy. (grin)
Are we related? Mine wants to start keeping a detailed record of our spending, by category (inference obvious). A frequent phrase is:”More mail order?”
I just tell him better we have the tools and appliances and such that we will need and that will last than to have everything die the day all money is devalued 80%.
I am also the family saver and I will bet you that the government doesn’t know the half of what the real savings rate is. There is a lot of under the table money being held in the Bank of Serta.
My wife has just discovered fiscal austerity. No wonder we are in a recession.
We have drastically cut our spending. We weren’t big on cc to begin with and used it only because of suddenly having to pay for private school. (A pox on the AISD administrators).
We are following Dave Ramsey’s books. We were frugal to begin with. Now we are trying to get into a mode to survive the coming chaos (food supplies, guns, ammo, etc) Are friends and families are right there with us too.
I think you're onto something there.
What is unusual is that I just bought a new AMERICAN car a few weeks ago (nearly all cash)....yet I hunkered down on saving money...and I am now spending less overall than before buying the new car...
I miss the days when real economists always supported saving over spending. Now...with all the Nutty Globalist bad economics...they are telling everyone to spend....just great.
The more we save...the easier we will get out of this recession...
But Obama’s Socialism will not cure the failures of Nutty Globalism
If savings are up 2.9%, paying down debt is up 10% IMO.
Confidence in Congress was less than 10% a year ago and is down from that figure today. (My Guess)
I began my “Zero” Consumption Plan on November 5, 2008. I took President Rahmabama’s words seriously. He told us we need to use smaller cars, eat less, use less, blah, blah, blah. So being the Patriotic American that I am, I am following his advice. I will of course change my Consumption Plan once I feel safe and financially secure. Considering his Cabinet nominations and the nonsense he speaks I’ll be saving a whole lot of money for quite some time. ; )
Lots in our neighborhood are down from about $100K to $60K....
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