For a long time in U.S. a trend was to spend more and to save less.
Personal saving is a difference between after-tax income (which is disposable income) and spending. An average personal saving rate (which is saving as a percentage of disposable income) was in steady decline since beginning of 1980s.
Personal saving rate dropped from over 12 in April 1982 to negative number (-2.7) in August 2005. That trend was unsustainable for a country and for average citizen.
Shock of current recession was a wake-up call for many. Personal saving trend was recently reversed - see monthly personal saving rate.
Personal saving rate went from 0.8 in August 2008 to 1.2 in September to 2.4 in October to 2.8 in November.
People started to save more out of necessity and because they see more hard times ahead.
Very few economists are still talking about V-shape recovery from current recession. Most economists believe now in U-shape or even L-shape recovery. L-shape recovery means one or couple lost decades like in Japan.
That means savings is for everybody not only now but in a long-term too.
Sunday, February 1, 2009
Subscribe to:
Posts (Atom)
