Good Economy? Why is No One Saving?
If the United States economy is so good, why is our rate of savings the worst it's been in 75 years?
The current rate of unemployment in the United States is 4.5%. That doesn't sound too bad!
Utah's unemployment rate, currently at 2.6%, is projected to scare some businesses away from the Beehive State. But that's because nearly everyone who wants a job has one. There are help wanted signs everywhere.
So I am perplexed why Americans aren't saving. Incomes appear to be going up, but spending seems to be outpacing the rising incomes. Is it because the average American wants more toys and gadgets than he used to? An Associated Press article discusses possible reasons:
The savings rate has been negative for an entire year only four times in history - in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were vastly different during the two periods.
During the Great Depression, when one-fourth of the labor force was without a job, people dipped into savings in an effort to meet the basic necessities of shelter and clothing.
This time around, the reasons don't seem so clear cut. The fact that we're not saving can't bode well for our economic future. Maybe the economy isn't as good as we thought?
What gives? I wonder if a "rainy day" is coming...