No Rainy Day Savings For Americans

[jeffrey]

The Commerce Department has reported that Americans in June stopped saving with the personal savings rate dropping to 0% - the lowest it has been since a one month savings dip after the 9-11 terrorist attack. American are on track to save less than 1% this year which would be the lowest saving rate since the great depression.

While the 0% saving rate looks bad, how bad the overall saving rate is difficult to ascertain. That's because the Commerce Department doesn't include capital gains and investments in pension plans when it calculates the savings rate.




To make matters more complicated, there's a sort of paradox currently taking place. Even though Americans are saving less, there net worth is rising. This is mainly due to rising housing prices and a slight improvement in the stock market.

Even with these other forces, the lack of saving is troublesome in the long term. While there are people with retirement and capital gain savings, there is also a large portion of the population without any savings at all.

A recent Consumer Federation survey found that more than 40% of all women had less than $500 in the bank. For women between that ages of 25 to 34 the statistic rose to 55% with little to no savings.

[Jorge]

Well, since I'm one of those women that has no savings, I'd say they're accurate. Trying to fix that, though. I think no savings means that we're going to be hit a lot harder if anything troublesome happens with the economy. Credit doesn't last forever.

[Bluezy]

True. People have been hit hard after 911. But to look at it another way, people might be saving a lot more, just not placing it in banks where it is reported. Echos of the Great US Depression.

[Roger]

I seriously doubt Americans are saving their money somehwhere where it can not be reported. The IRS frowns on that sort of thing if you are earning interest and not reporting it. Seriously, though, I think most people feel that even if they are spending 10% more than they earn each month, it is acceptable because everyone is doing it. The average household has $9300 in credit card debt now, when do they finally give up and say "I owe so much, what do I care?"

[Bluezy]

I seriously doubt that Americans are NOT without a stash somewhere, especially not in banks, again, echos of the Great Depression. And anyone who does not have some emergent stash in a sock drawer, freezer, etc., is looking for trouble in the event that they need money quick. Times are too volitile to place all your earnings in one location or in risky investments, and the emergency might require funds faster than can be transferred from Emigrant, etc.

And in all due respects to the US Revenue Department, they get their rightful share in what we pay to live in the US. No one is going to begrudge a survival fund.

[BAGAGT1]

I don't believe that 401k contributions are considered in the personal savings rate so I'm sure that the real personal savings rate is higher than this statistic provides. Still, Americans are too far into debt, far too much money being spent on lavish homes and cars and little being invested in traditional money market accounts, savings accounts and CD's. I guess for those of us who do not know our country's history, we are doomed to repeat it.