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New Report Finds Americans Are Not Saving
- August 17th, 2005
Americans aren't saving, and many are spending more than they earn. The Commerce Department's Bureau of Economic Analysis has reported that the personal savings rate in the United States reached zero percent, but economists differ on whether to worry about the drop. An article in the San Francisco Chronicle says that some economists claim the government's methodology is outdated while others worry that Baby Boomers will not have enough saved for retirement, which is six years away for the oldest of them.
According to the article, some economists believe the official savings rate is outdated because it doesn't take into account personal wealth from stocks, bonds, and houses. The value of these assets has gone up considerably over the years. According to the article personal and nonprofit net worth has grown 24 percent in the last three years. Therefore, the argument goes, because people are wealthier, they do not need to save as much. If worst comes to worst, the economists say, people can sell their stocks or their houses.
Other economists are not as optimistic about the numbers. They worry about what happens in the long term if there is a housing slump or the stock market crashes. The economists are concerned that retiring Baby Boomers, selling their houses, will drive down the housing market. In the short term, falling savings may also hurt retail sales and consumer spending.
To read the full article, click here.