Spendthrifts? Poor savers: U.S. saving rate recently as low as during the Great Depression.

January 02, 1999

AMERICANS are saving less than ever according to recent government statistics. In September and October, the personal savings rate turned negative for the first time since the Great Depression: For every $100 Americans earned, they spent $100.20.

But experts say the sharp fall in the savings rate since 1993, when American households stashed about 5 percent of their income, is not necessarily dire news.

The lack of personal savings has not translated into a lack of investment capital. The national savings rate -- which includes corporations and the government -- has rebounded from its low earlier in the decade. Moreover, foreigners happily are investing their savings in the United States, so businesses aren't facing a capital shortage just yet.

And where might we be if Americans began to curtail their spending and squirrel away their earnings?

Some economists fear we'd be in the same position as the Japanese, who continue to save at exceptionally high rates, but whose lack of spending keeps the economy in recession.

Pub Date: 1/02/99

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