Which it is not, but people gotta have stuff:
People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.That’s OK: the Boomers will just vote to take all my money once theirs runs out. Seriously though, although economists tie the spending binge to a run-up in real estate and investment portfolios, I think it’s because credit has become so pervasive and accessible that Americans just purchase goods without thought to the cost or consequences.
The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.
…
Whatever the reason for the low savings, economists warn that it the phenomenon exists at a particularly bad time with 78 million baby boomers approaching retirement age. Instead of building up savings to use during retirement, baby boomers are continuing to spend all their earnings.
11 comments:
Definitely, that must be it. Everybody's buying plasma screens on layaway.
It couldn't be that despite Wall Street gains, the actual human U.S. economy isn't doing too hot.
Actually, the US economy is doing too hot.
By nearly all metrics (GDP, job creation, etc.) this economy is doing very well, thank you.
Even wage growth has recovered (historically, that metric takes a few years to recover after a recession, and true to form, it has).
If there was a Democrat in the White House right now, you would be touting this as a robust economy (admit it).
The reason people aren't saving (and this is a trend that has been going on for decades), is that people want stuff, and they are willing to take on some debt to pay for it. People are basically secure, and don't feel like they need to sit on big nest eggs.
Stop yer whining.
Ooooh, what an unfortunate rhetorical ploy. If there was a Democrat in the White House, we'd have a gigantic budget surplus, right this minute. And our unborn grandchildren wouldn't already be tens of thousands of yuan in the hole.
"By nearly all metrics," are you high? The housing market is plunging. Max Bialystock couldn't finagle the unemployment rate more than it already has been. Wall Street's gains are coming at the expense of workers even more than normal. 46% of the growth in corporate income has been distributed as corporate profits; in previous eras, it was about 20%. Wages are sub-stagnant vs. inflation-- since November 2001, the average real wage is -0.1%. (Productivity is up 14.7%, with none of the profit being returned to the workforce that produced it.) Energy costs are up. The poverty rate is up. The percentage of workers with employer-provided health coverage has fallen every year, while family health costs have not too coincidentally risen 43%. Inflation-adjusted median household income has fallen throughout the 2000s, while debt has risen 42% since 2001.
When you say "nearly all metrics," the second (and final) one you cite really should be a little more accurate.
The U.S. had just 1.9% more jobs in June 2006 than it did in March 2001, the start of the last recession. Previous business cycles had never seen a job growth level under 6.0%.
Bush remains the only President since World War II with a negative overall total in job creation. You'll have to blame that biased, tree-hugging Bureau of Labor and Statistics.
TGK: By nearly all metrics this economy is doing very well, thank you.
Oh, no, TGK. Thank YOU.
Stop yer wishing.
Where do I start…?
1) Here’s the BLS job data for the last decade (click on “Civilian Labor Force Level”):
http://data.bls.gov/cgi-bin/surveymost?ln
Also, remember to check the graph. I count ~ 9,000,000 new jobs during Bush’s term (without the recessionary economy inherited from Clinton, job growth would have been even more phenomenal).
2) Does Bush have a “negative overall total in job creation,” or was job growth from March ’01 to June ’06 “just 1.9%” ? Both can’t be true (unless millions of jobs disappeared in the last seven months).
3) Are you stating that the unemployment rate was finagled? That’s entering into tinfoil hat territory.
I can’t waste time on the other stats you cite (my labor is busy being exploited by the Bourgeoisie), except to say that I’m sure they are bunk. Most Americans don’t float in a sea of misery, as you seem to believe.
And here's another post from NRO, re: today's job-number announcement:
http://corner.nationalreview.com/post/?q=MTAxMTc1YTNkMWFlYTE0OGI3MjRkNTcxOGUzMzU0ODA=
Does Bush have a “negative overall total in job creation,” or was job growth from March ’01 to June ’06 “just 1.9%” ? Both can’t be true (unless millions of jobs disappeared in the last seven months).
But the U.S. population has not remained static since March '01. It has gone up almost 20 million during this period. It's the same as a national voting percentage going down, even while the raw vote totals reach a new historic high.
This can also be seen by the "Civilian Labor Force Participation Rate," also available on the data.bls.gov website you recommend. It shows that the rate has dropped almost 1% since 1997. Furthermore, you can click on the "Unemployment Level" and "Unemployment Rate" tables, which show 1997 and 2006 rates that are similar, despite an increase in the total number of unemployed people. (Not to mention an increase in people, period.)
These figures help explain why no sensible economist takes the unemployment rate at face value. The unemployment rate measures a specific subset of those who do not currently work. Those whose benefits have expired before finding a job are not factored in, nor are those who are so chronically unemployed that they have ceased trying to work, nor are those who are disabled and who cannot work. Working-age prisoners are not included, which doesn't impact the job numbers but does affect the demographic pool. Those with part-time or temporary jobs are counted as fully employed. Self-employed people are not counted against the unemployment rate when they do not work, but are included in the working pool when they do. Elderly and disabled people are included if they work, but are not counted if they do not. Anyone without a job but deemed ineligible for unemployment benefits is dropped from the equation. The issue is further muddied by changes to the methodology; when the government tightens benefit entitlements for unemployed people, those affected are simultaneously taken off the employment register. During the Clinton years, unemployment was redefined to eliminate more than 5,000,000 "discouraged" workers from the formula, thus lowering the rate.
Qualitative studies can account for these factors, but quantitative studies just give you a number at the end. For these reasons, saying "U.S. unemployment is 4.8%" does not carry the same precision as saying "John is six feet tall."
The tinfoil hat manufacturing sector has been hit especially hard.
I can’t waste time on the other stats you cite (my labor is busy being exploited by the Bourgeoisie), except to say that I’m sure they are bunk.
Stupid data! Get out of my head! I hate you!
And let's not count a few *trillion* dollars in 401K as savings.
I suggest everyone not happy with the US economy and employment rate move *immediately* to a more congenial economy, like France (or, for those who truly want to put their money where their mouths are, Cuba or North Korea) rather than continuing to contort themselves by torturing data until it gives them what they want.
"Love it or leave it"; what an idiotic response.
I wish I had the kind of mind that was soothed by simplistic binary options.
http://www.washingtonpost.com/wp-srv/opinions/cartoonsandvideos/toles_main.html?name=Toles&date=01162007
Can we agree that the mechanics of overspending and undersaving in 2007 is different in kind than in 1937?
Back in the time of 20% unemployment, people were dipping into savings to keep off the bread line. Now people are making hard choices between plasma and LCD.
Federal Reserve Chairman Benjamin Bernanke spoke about income inequality yesterday, including hard numbers.
In the quarter century between 1979-2006, income at the 90th percentile rose 34%, while at the 10th percentile, it rose 4%.
The 99th percentile took home 8% of the nation's total income in 1979. Today, their share is 16%.
CEO compensation is up almost 1,000%, despite flat overall pay rates.
Terrible, just terrible. Not the inequality. It's tragic to see a U.S. Federal Reserve Chairman acknowledging the kind of data that inevitably leads to Open Class Warfare™.
Post a Comment