Please, do a search for some of my classic posts on the topic. You'll find more than enough information provided by me that renders this thread a joke.
I do not for a second discount your economics knowledge. I just thought it funny that you call out a poster in one thread about personal attacks and then do the very same thing in another.
There have been several rational explanations. Can you answer any of them or are you just going to stand pat with the "not satisfied" and run away from yet another substantive discussion?
I'm not a liberal (so don't call me one) but I do think a negative savings rate can be very dangerous in this situation. It seems that people are basically cashing out on their homes and spending the $$. This can be a very bad thing if the the real estate market heads for a downturn. A lot of people may be in a situation where they will be forced to sell their homes to pay off their HELOCs. If real estate does take a downturn - the proceeds may not cover their debt. All this can raise interest rates.
Another thing. Can someone explain to me how this is a political issue? I don't recall anywhere in the GOP or DEM party platforms where they mention savings rates. Also - do liberals preach higher savings? No. Do conservatives preach lower savings? No. I don't think Bush/Clinton/Kerry/Bush or any president for that matter can really have much of an effect here.
Lol, you're absolutely stumped. I honestly would like someone to explain to me how this is a positive. 73 years is a long time.
Bigtexxx and TJ, were shown well thought out answers with facts, and rationales. They have yet to respond with anything even on the same level. They haven't listed facts, or shown the rationales presented to be false in any way. You would have thought that on economy they might try and present a rational argument, but we see that isn't the case.
For two completely different rationales. As a consumer, it's damn near moronic. BUT, a negative saving rate does show quite a bit of faith in the economy; especially long term. You really can't argue that from an economic standpoint.
I think a negative savings rate shows that people are spending more than they make, people are living check to check and that people now don't have the will power that older generations had "to go without". Savings are down and debt is up. This is not a good thing, no matter which way you try to spin it. If these same people get disabled and can no longer work, then they have nothing to fall back on and the govt. will have to take care of them. And those of us working and paying taxes.
Yes, of course spending will drop in a recession; however, if people have not been saving during the good times, spending will drop much more sharply, leading to a much sharper recession/depression. You'll also see far more bankruptcies and other financial disasters. This lack of saving will likely lead to a much sharper downturn in the economy that could otherwise be avoided whenever the economy does inevitably slow. That's why not saving during a strong economy is bad thing for the country.
The problem is y'all are comparing apples to oranges. One has no effect on the other. If people are spending money, your economy gets stronger. I mentioned previously how inflation will turn the boat around when and if the economy slows. You are talking about people's spending habits, not the economy. And if people don't save their money, it is their own fault. Don't expect a Gov't handout because you took 3 months salary and bought a flat-screen.
At least part of this, in my opinion, is the incredibly low rate of interest paid for traditional American middle class vehicles for savings. I'm not talking about the stock market, I'm talking about CD's, and other savings accounts. The rate of return has been so low that some very short-sighted people are choosing to spend it, instead, and are viewing the appreciation on their homes as an alternative method of saving "money" for the future. I didn't say it was very smart, but I think it's fueling part of this. Keep D&D Civil.
The economy is a sum of people's spending habits. If you don't believe other people's spending habits can hurt your economic future, I don't think you understand the nature of the economy very well.
You do know that CDs are paying between 4-5% right now, don't you? That's less than 1% less than what they were paying in the mid-nineties. What are you expecting??? 9%??? That only happened at one time; back when Carter was in office and inflation was through the roof. - also called an "inverted" economy.
Well, I did minor in it. You? There are a ton of variables to the economy. Public Spending is only one cog of it. It certainly isn't the underlying, or "X" factor.
I guess the risk that most analysts are concerned about are the millions of baby boomers that are about to retire and that traditionally savings rates should be going up with so many pending retirees. Then again, others think, as Fatty pointed out, that this could be a sign of confidence in the economy.
What somewhat suprises me is that retail struggled in Q4 last year and most analysts expect that it'll struggle mightily this year as well (earnings outside of Exxon haven't been particularly good). This suggests the money isn't be wasted but is being put to other uses. High energy costs and healthcare are likely big factors here, which is something we and Washington already know need to be addressed. While this isn't something that should be leaving people shaking in their boots, it isn't a positive either. Housing prices have shown in the last quarter that they may be reaching a plateau, and when a home is most people's largest source of equity that doesn't bode well for a spend and spend consumer base. There's a reason the Fed's been raising rates the way they have. What's interesting to note is that this spending spree has become the lifeblood of almost every other developed and high-level developing economy on the planet. The U.S. is the only country spending right now while every other country saves. If we start saving too, that won't necessarily be a positive either. So basically, there's not much that can likely be done about this immediately.
