Desperate Americans Are Saving The Least Since The Start Of The Last Two Recessions

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.




Hongcha toady Fri, 07/28/2017 - 16:24 Permalink

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 by toady

Too-Big-to-Bail (not verified) Fri, 07/28/2017 - 12:54 Permalink

but Savings is deflationary in a "money is debt" economic system. No one that matters wants that...

scintillator9 Francis Marx Fri, 07/28/2017 - 13:08 Permalink

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 by Francis Marx

Francis Marx Fri, 07/28/2017 - 13:01 Permalink

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.

Father ¢hristmas (not verified) Francis Marx Fri, 07/28/2017 - 13:09 Permalink

Because they figured out that not only could you juice customers for life, but you could be backstopped by 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 by Francis Marx

Father ¢hristmas (not verified) Fri, 07/28/2017 - 13:02 Permalink

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.

GlassHouse101 Fri, 07/28/2017 - 13:08 Permalink

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.

taketheredpill Fri, 07/28/2017 - 13:40 Permalink

  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.

rwe2late Fri, 07/28/2017 - 13:55 Permalink

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.

moonmac Fri, 07/28/2017 - 14:10 Permalink

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. 

Iconoclast Fri, 07/28/2017 - 14:19 Permalink

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.

gaoptimize Fri, 07/28/2017 - 15:28 Permalink

Two articles proceeded this one here in 48 hours which made this article predictable.  Yesterday: "Average rents grow 7% yoy".  "...wage growth lags".

sessinpo Thu, 09/14/2017 - 23:09 Permalink

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.