The last two times Americans were saving this little in order to maintain their lifetsyles, the US economy was in recession.
According to newly revised government data, Bloomberg reports that American households scaled back their pace of savings to the lowest level in nine years at the end of 2016 as the growth of their wages and salaries slowed.
The personal savings rate was 3.6% in the fourth quarter of 2016, down from a previously published 4.9%, according to somewhat dramatic annual revisions to gross domestic product and related data, released Friday by the Commerce Department. That’s the lowest reading since a 2.8% rate in the final three months of 2007, just as the U.S. was entering a recession.
The saving rate recovered somewhat in the first three months of the year, to 3.9% after a previously reported 5.1% . In the second quarter, it was little changed at 3.8%.
The lower fourth-quarter rate was one of the bigger changes in the government’s annual update of GDP, and paints a quite different picture from the "recovery" images put forward by the Obama administration.
Instead of recovery, as Bloomberg notes, the figures suggest that consumers were saving less to maintain their spending entering 2017. That’s significant because consumption accounts for more than two-thirds of gross domestic product, and the revisions may help explain some of the slowdown in first-quarter purchases.
Comments
We're broke.
As a country, yes.* * *But since our kid has gone on to get a good job after college (and having sold our ocean-front condo), we are saving moar. Except for traveling. Still, we are battening down our hatches...
In reply to We're broke. by CJgipper
With the huge wealth gap created by the Fed Gov't and the Fed Res over the last 5 years or so, there is a large population that has no choice but to spend every penny just to survive. A recipe for torches and pitch forks.
In reply to As a country, yes. * * by 38BWD22
"Savings" Lol. Debt money cannot be saved. Only fleaced.
In reply to With the huge wealth gap by Ghost of PartysOver
Obviously they listened to him: http://www.nytimes.com/2010/06/21/opinion/21krugman.html
In reply to "Savings" Lol. Debt money by yrad
saving is criminalized and despised
In reply to Obviously they listened to by Bunga Bunga
Nearly 8 years ago I started saving money. ZHers will understand what that means. Signed: a 29 year old "snowflake millenial".
In reply to "Savings" Lol. Debt money by yrad
I turned some of the debt money into 10oz silver coins on the 7th. I'm up a dollar an oz right now.
In reply to "Savings" Lol. Debt money by yrad
The buy premium wiped that out. Still, good on ya.
In reply to I turned some of the debt by ScratInTheHat
Saving as in 401k and at banks? No.Savings in ammo? Through the roof!
In reply to We're broke. by CJgipper
Ammo is good too. Very good...
In reply to Saving as in 401k and at by toady
As of this year California is the 6th-largest economy in the World. So basically it is a large country.This large, very Socialist country is going to photograph and fingerprint ammunition buyers starting in 2018.I predict Kali will be the first state in the USA to ban weapons, period. Ban ownership, slap a metastisizing tracking surveillance on everyone in the data banks that owns one and make them turn them in or pay a metastisizing tax.... Or have their DLs pulled. Or curtail some other service. Et cetera ad nauseam.Therefore, as a reluctant resident I am buying ammunition and weapons and consider them the best hard asset to accumulate, in this country anyway, right now.
In reply to Saving as in 401k and at by toady
by what definition have we not been a recession for, like, the longest?
In reply to We're broke. by CJgipper
but Savings is deflationary in a "money is debt" economic system. No one that matters wants that...
If they would cut taxes, we wouldn't be in this dilemma.
Not only taxes, but one must not forget stealth inflation in food (less product, same or higher price), and also medical costs.If one really wants to have an eye opener, just sit down one day, and add up all of one's overhead to see what it costs just to keep a roof over one's head.Property taxesRent / MortgageInsuranceFoodFuel / HeatUtilitiesMaintenanceAnd thanks to ZIRP, no one is making hardly a dime in interest anymore, and thus everyone is being herded to "the market" as the only way to get any return on ones money.Perhaps people should be more concerned with return of one's money at this point.
In reply to If they would cut taxes, we by Francis Marx
This is sarcasm, right?
In reply to If they would cut taxes, we by Francis Marx
Obamacare! Taxes! Jobs!youll soon find out how we will vote and out you'll go.
The biggest problem is over the last 30 years they pump up economies by getting everyone to buy on credit. That only works so long. Once there is not enough things bought on credit, everything plunges. We I was a kid. most people were investigated when they applied for a credit card, making sure they were credit worthy. Now...they give them to anyone.
Back then, the banks were on the hook for losses. Now... well, you know.
In reply to The biggest problem is over by Francis Marx
Because they figured out that not only could you juice customers for life, but you could be backstopped by fed.gov for employing a wholly unsustainable and borderline-retarded business model.An economy is a sinking ship, with plebes slaving away to inch closer to the end of the boat that has taken on the least amount of water at any given time.Stawks are just an accelerated model of this, which is why once the shoeshine boy is giving hot tips, you know there are too many people at a particular end of the ship.
In reply to The biggest problem is over by Francis Marx
I'd rather spend my savings on drugs and undocumented prostitutes.With enough cøke, meth, mescaline, molly, dro, vodka, and Cialis, I could totally ignore starvation and malnutrition after the Peter Schiff-prophesied collapse.
Ha ha. Were I single, I might be thinking the same way.
In reply to I'd rather spend my savings by Father ¢hristmas (not verified)
Take the REAL red pill. Accept Jesus.
In reply to I'd rather spend my savings by Father ¢hristmas (not verified)
+ eternityGreen for really long-term thinking.
In reply to Take the REAL red pill. by GlassHouse101
billionaire tax cuts can fix this. /s
They're not saving, they're dumping whatever money they have into the markets, which is what the elites want! You can't slaughter sheep when they're scattered all over the place, you need to put them into the single pen first.
Commerce Department counts BTC as spending. :D
I've been stuffing a little away in bitcoin every 2 weeks. I don't want worthless USD sitting idle in my bank account.
But...but...I thought GDP has been in the shitter for the past 5+ years because of a "savings glut"?Krugman??? Summers??? Anyone???
Right. They need to force people to spend their savings to stimulate the economy. Forced spending when you have no money. Interesting. Isn't that called debt?
In reply to But...but...I thought GDP has by Bam_Man
Why should they be saving more? In case you haven't noticed the Dow is almost at 22,000. How bad can things really be?
Savings rate also fell to this level in 2005 when people used HELOCs and didn't feel the need to save. This time around average person doesn't have anything to put aside.
Maybe they're spending their savings on RV's!
Comparisons of historical average savings are somewhat bogus. Why would anyone try to save money in a bank nowadays??The savings rate banks pay is less than (even the reported) inflation!Better to rely on credit card for any "emergency" expense,and use available cash to purchase durable goods, secure (as possible) investments,and precious metals.
A person's money, by law, is not safe in a bank.
In reply to Comparisons of historical by rwe2late
As a kid I went to the bank and put my Communion checks in a 6 month CD. I couldn't believe I was earning cash by doing nothing except not spending it. Later I found out the money came from homeowners paying 15% interest on mortgages. That generation then became the Ruling Class so now CD's pay nothing and the homes they bought for $60K are now worth $400K. Life is strange indeed.
Every time you scrounge together $1300 buy one oz of gold. Simple.
In the uk the savings rate recently collapsed from what was a previous record low of 3.4% set in 2016, to 1.9% in Q1 2017. Similar to the USA about 50% of adults can't lay their hands on 500 of the domestic currency without borrowing. Disconnects are everywhere; record high markets, house price rising, the majority of folk are skint. Didn't think we'd have a 2007/2008 redux inside ten years.
Two articles proceeded this one here in 48 hours which made this article predictable. Yesterday: "Average rents grow 7% yoy". "...wage growth lags".
What is the point in saving a fiat that buys less the longer you keep it? The future has already been spent. Point of no return is passed.