US Savings Drop To Lowest Level Since Great Depression

[YChromozome]

Boomers saving at lowest rate since Great Depression - News Tribune - Feb 02 2007

WASHINGTON (AP) - People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire.

In fact, the Commerce Department reported Thursday that the nation's personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years.

...

The 1 percent negative savings rate in 2006 followed a 0.4 percent negative rate in 2005. There have been only four years in history that the savings rate has fallen into negative territory. The other two were 1932 and 1933 during the Great Depression.

I guess this was inevitable. If they are spending more from savings now in boom times than during the great depression when 25% were unemployed and people were relying on savings to buy food, I wonder what happens when times get tough? They won't have any money left for contingencies or too weather out the storm.

It also doesn't paint a very good picture for sustainability of current spending levels and hence the sustainability of general US economy and the effects it will play globally.

 

[son of baglimit]

if you can find the detailed report on this, please post the link.

as always figures can distort - ie what are considered savings?
if you only look at bank accounts, then obviously with pension plans (ie superannuation here) helping people save for retirement, are taking money from other savings - and the low rates on offer for savings, plus the low borrowing rates, allowing people to enjoy life NOW rather than have to save up for it are going to greatly effect the figures.

cheerio

 

[theasxgorilla]

Remarkable timing really. Expect to see more of this kind of stuff in the US media going forward. The US doesn't have superannuation and Australia is a successful, living, breathing example that super works. Well, at least it forces people save something and can help your sharemarket rocket to a continuous stream of new all-time-highs.

http://www.spinwatch.org/content/view/3891/8/

 

[wayneL]

The US doesn't have superannuation

Are you sure? What is 401k then?

 

[theasxgorilla]

I should elaborate. The US does not have a compulsory national retirement income scheme.

But imagine what forcing your workforce to save 9% of it's income and invest it into the sharemarket might do for share prices.

 

[wayneL]

I should elaborate. The US does not have a compulsory national retirement income scheme.

But imagine what forcing your workforce to save 9% of it's income and invest it into the sharemarket might do for share prices.

Cause them to become overvalued?

(Just being awkward )

 

[Bushman]

Boomers saving at lowest rate since Great Depression - News Tribune - Feb 02 2007



I guess this was inevitable. If they are spending more from savings now in boom times than during the great depression when 25% were unemployed and people were relying on savings to buy food, I wonder what happens when times get tough? They won't have any money left for contingencies or too weather out the storm.

It also doesn't paint a very good picture for sustainability of current spending levels and hence the sustainability of general US economy and the effects it will play globally.

In hindsight, articles like these (dated Feb 2007) make great canaries. Savings rates is def something to watch for to pick the top of the next asset valuation cycle!