Newspaper article THE JOURNAL RECORD

Americans' Savings Rate in a Big Slump of Late

Newspaper article THE JOURNAL RECORD

Americans' Savings Rate in a Big Slump of Late

Article excerpt

NEW YORK - Whatever Americans have been doing with their money lately, they apparently haven't been saving very much of it.

The latest figures from the Commerce Department indicate the savings rate - the percentage of income not spent - was 3.4 percent in both June and July.

Month by month, the figures tend to jump around quite a bit. But so far this year, the rate has lagged behind the 6 percent annual rate that has prevailed in recent years.

Even that latter figure looks paltry when you consider the standard recommendation of most financial advisers that people should aim to save at least 10 percent of their disposable income in their working years.

According to the University of Michigan's Survey Research Center, less than two-thirds of U.S. households list savings accounts among their assets.

Because of the indirect way in which they are calculated, the Commerce Department's data on the savings rate ""should always be viewed somewhat skeptically,'' said Maury Harris, chief economist at the Wall Street firm of PaineWebber Inc., in a recent report on the subject.

""However, the recent drop in the Commerce Department's savings rate measure is so large and the resulting level so low that it should not be ignored.''

Harris says several forces have combined lately to depress savings. The problems faced by farmers lately have quite evidently made savings an unaffordable luxury for many people in areas of the country where agriculture sets the pace of the economy.

In addition, he notes, a large part of the population - the fabled ""baby boom'' generation - is now in the 30-45 age group, which traditionally uses debt more heavily than the rest of the population. …

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