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6 comments:
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Jay Charles
I have a couple of comments about saving that no one mentions and I would appreciate your opinion.
1.As the baby boomers age and retire they are working less and living more off of their investments. These people are spending more than they are earning and this would give you a lower savings rate but this is not a bad thing. It is the reason they saved the money in the first place. So, it is natural that the saving rate is a little lower. It will probably get lower still as more people retire.
2.What would happen to our economy if people got the religion and started savings at 10% or even 5% of their disposable income, like in the good old days? Since money saved is not money spent, wouldn't consumption go down 5% or more. And with consumption at 70% of GDP we would be in a recession. Can we afford to save?
Hello Roger, hello Trixie. Your video brought together a couple of things which I think are linked - saving money and historically low interest rates. I, for one, am a saver rather than a spender but I'm also always looking for better returns than a savings account and inflation. I wonder if the money I hold in assets alternative (ah, actually three things) to a savings account, such as bonds and stocks, is counted in that figure of 0.2%?
Also I'm about to embark on training to start a new career, investing in myself if you will. I won't be working so I will have to fund this with my savings, and so unfortunately my savings will have a negative figure for 2008. I appreciate your sentiment is directed towards those not as fiscally disciplined though.
As I've got your attention, the S&P over 21 years, on a logarithmic scale, looks particularly interesting. Could it be the recent volatility will eventually look like the corrections of 1990, 1998 and mid 2002? We were due, after all.
anon 8:57, maybe I have it wrong but savings rate is versus income. make $100k save $1k or 10k or whatever.
as for your point number 2, if your numbers are correct and an instant increase in savings rate caused a recession i think that would be far better than if we ever have to pay the piper for decades of living beyond our means. i think a recession in that context would be an adjustment.
anon, 956, best on your new venture. WRT to this looking like any of the periods you cite, of course that could be but i think the nature of the secular bull that ended in 2000 skews a lot of things meaning more fallout to come.
Roger, I believe some of the cause of a lower savings rate, is the true cost of living, not the ghost numbers the Gov. pulls out of the air, outstrips the earners wages and folks are forced to lower their savings allotment to make up the difference to meet daily needs.
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