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Thread: What Does it Mean, Saving Rate drops to 12-Year Low when 50% of Americans Don’t Have

  1. #11
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    Quote Originally Posted by MaryAnne View Post
    Fewer jobs created in 2017 than in 2016
    Yep. But you're LYING when you say it! You didn't get the memo?

  2. #12
    Dick with my Buzz...Try DebateDrone's Avatar
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    Quote Originally Posted by Libertine View Post
    Sure it does, we are a consumer driven economy.
    Consumer is the key word. I spent more this past holiday season than in prior years...not because consumer confidence was up...because I planned ahead to.
    Thanks from MaryAnne

  3. #13
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    Quote Originally Posted by labrea View Post
    by Wolf Richter • Jan 29, 2018

    Or what the averages are hiding.
    We will start with income and see what’s left over, and for whom.

    Personal income increased by 4.1% in December from a year earlier, the Bureau of Economic Analysis reported today. This includes all income received by all persons from all sources, such as from labor, financial assets (dividends and interest income but not capital gains), business activities, homeownership (rentals), government transfers, etc.

    “Real” personal income — adjusted for inflation via “chained 2009 dollars” — rose only 2.37%. This is for the US overall.

    Per-capita “real” personal income – which accounts for 0.71% population growth in 2017 and measures income per individual – rose only about 1.7%. If the inflation measure even slightly understates actual inflation as experienced by these individuals, their personal income growth might go away entirely.

    snip

    All these surveys say the same thing: about half of Americans have little or no savings though many have access to some form of credit, including credit cards, pawn shops, payday lenders, or relatives.

    snip

    When the overall saving rate drops it means that the surge in borrowing at the bottom 60% or so is no longer outweighed by the growth in savings at the top.

    But economic risk lies at the lower echelons – with people who cannot afford to lose their jobs. If something goes wrong in the economy, it’s at there where defaults are happening and where job losses hurt the most. This is why these low saving rates were a red flag before the Great Recession – not because households at the top were saving less but because households in the lower 60% of the economy were stretching further to borrow to fund their spending and to deal with existing debts.

    https://wolfstreet.com/2018/01/29/sa...-have-savings/
    Ms. Labrea,

    It means the dog food industry will be doing well....

  4. #14
    Veteran Member MaryAnne's Avatar
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    Quote Originally Posted by trumptman View Post
    People are investing and speculating more than saving right now and dozens of years now because the prime rate is near zero and just a bit above that is the interest rate for saving.

    My first house was purchased with an interest rate of 8%. Back then it was pretty easy to get 6% return on a savings account and bonds, t-bills etc paid more. You could invest in safe and conservative investment vehicles because they paid something. However the government has been the biggest borrower for decades now and it needs cheap money so everyone becomes a speculator to get a return since saving is a losing game. Give then real rate of interest your money loses value in a savings account.
    I can not disagree on this one. I remember interest rates of 15%. When we went to pay College tution they recommended taking a loan at 8%,the money to be paid back 1 year after graduation. My first experience in really handling money.

    Today you ipuse a credit card foe everything. They back you on the purchase. Just make sure yo have the money to pay it off.

    I have run into a couple of instances of people reneging on their contract. Problem solved by the CC company. One sent me merchandise I did not order. Sent back by the USPC with a tracking number. End of problem.

  5. #15
    Veteran Member MaryAnne's Avatar
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    Quote Originally Posted by DebateDrone View Post
    Consumer is the key word. I spent more this past holiday season than in prior years...not because consumer confidence was up...because I planned ahead to.
    And had the money to pay for it available.

  6. #16
    Veteran Member MaryAnne's Avatar
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    Quote Originally Posted by cpicturetaker12 View Post
    Yep. But you're LYING when you say it! You didn't get the memo?
    If I did,I ignored it!

    220,000 Jobs created this month. Just announced. Gearing up for Spring. Hiring is done in cycles. So are layoffs.

  7. #17
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    Quote Originally Posted by Amelia View Post
    We bought our house near the end of 2016. So that and associated costs lowered our savings in 2017.
    That always does. And hopefully you'll have an appreciating asset and replenish your savings. But what Maryanne is talking about is a more permanent lack of assets AND structural within the economy! I repeat it does not bode well.

  8. #18
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    Quote Originally Posted by Libertine View Post
    Sure it does, we are a consumer driven economy.
    But SAVINGS makes for a HEALTHY economy!

  9. #19
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    Quote Originally Posted by Amelia View Post
    We bought our house near the end of 2016. So that and associated costs lowered our savings in 2017.
    I think the ridiculous cost of college for parents of students has raided what savings people could have. When you can buy a house for the amount a four year degree costs at some universities...

    My guess is many these parents take out second mortgages.

    When I went to college you could work a summer and pay your tuition for the year. You can't even make a dent now.
    Last edited by EnigmaO01; 2nd February 2018 at 02:20 PM.
    Thanks from bajisima

  10. #20
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    Quote Originally Posted by EnigmaO01 View Post
    I think the ridiculous cost of college for parents of students has raised what savings people could have. When you can buy a house for the amount a four year degree costs at some universities...

    My guess is many these parents take out second mortgages.

    When I went to college you could work a summer and pay your tuition for the year. You can't even make a dent now.
    I agree. When I attended college right after HS...my tuition was 41.75 a credit hour at a State university. I know, because my Dad saved all of the checks he wrote for my tuition. LOL Some of my friends are taking out Parent Plus loans for their kids. My GF who did this is in debt almost 100K at 53 years old from a combination of her son's engineering degree and her Master's degree. You are right, even if you start a savings account for your child's college the day they are born, may not cover the entire 4-5 years. Another expense that is getting ridiculous is new cars. I am looking for one now and saw a Honda Civic for 30K. I was shocked, since I paid cash for one in the late 80's. My buddy just bought one of those large trucks and paid over 50K for it. He is a house flipper and pays much less for the homes he refurbishes.
    Thanks from EnigmaO01

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