AbbyLane2001
Membership Revoked
Wednesday May 30 4:01 PM ET
Analysts: Saving Last Thing Economy Needs
By Jonathan Nicholso
http://clubs.yahoo.com/clubs/marketthoughts
WASHINGTON (Reuters) - For years, U.S. policymakers have warned of the potential problems posed by the microscopic saving rate of U.S. households, but now the prospect of Americans socking away more raises worries.
An outbreak of thrift as the U.S. economy attempts to muddle through its current rough patch could tip the economy into recession.
Federal Reserve (news - web sites) officials noted the potential for trouble from rising savings at a March 20 meeting to consider interest rate policy.
Facing a weakening economy ``consumers might well endeavor to boost their savings, and even a fairly small increase in what currently was a quite low saving rate would have large damping effects on aggregate demand that could weaken, if not abort, the expansion,'' minutes of the meeting said.
Barry Bosworth, an economist with the Washington-based Brookings Institution think tank, said the anemic rate at which Americans put away money for a rainy day needs to change, but not immediately.
``Now is not a good time for Americans to start saving,'' Bosworth said.
In the past, policymakers and economists had worried a low saving rate meant businesses had to turn increasingly to foreign investors for needed capital, leaving the economy vulnerable to sudden shifts in sentiment.
GONE NEGATIVE
According to Commerce Department (news - web sites) figures, the saving rate -- the portion of disposable personal income left over after spending -- has been in negative territory for some time. That means Americans either sold off assets or borrowed to maintain their spending.
----------------
Yup, its a house of cards waiting to come down. The only thing holding it up is the last ditch spending of 'consumers' who spend more than they earn.
If it wasn't so serious, it would be laugable.
The whole friggin' economy has gone completely crazy. Computer price wars. Plunging interest rates. Money supply SOARING. Foreign currencies plunging.
And now, the economic engine of last resort, the CONSUMER of last resort is only able to keep its head barely above water by spending faster than it earns. Deeper and deeper and deeper in debt we go.
Soon. Very soon, now.
The wave will hit. We'll never know from which quarter it will come. And, from wherever it comes, it won't be expected or anticipated.
Maybe Argentina. Maybe Brazil. Maybe Indonesia.
Who knows. But, it will come.
Soon. Very Soon, now.
Analysts: Saving Last Thing Economy Needs
By Jonathan Nicholso
http://clubs.yahoo.com/clubs/marketthoughts
WASHINGTON (Reuters) - For years, U.S. policymakers have warned of the potential problems posed by the microscopic saving rate of U.S. households, but now the prospect of Americans socking away more raises worries.
An outbreak of thrift as the U.S. economy attempts to muddle through its current rough patch could tip the economy into recession.
Federal Reserve (news - web sites) officials noted the potential for trouble from rising savings at a March 20 meeting to consider interest rate policy.
Facing a weakening economy ``consumers might well endeavor to boost their savings, and even a fairly small increase in what currently was a quite low saving rate would have large damping effects on aggregate demand that could weaken, if not abort, the expansion,'' minutes of the meeting said.
Barry Bosworth, an economist with the Washington-based Brookings Institution think tank, said the anemic rate at which Americans put away money for a rainy day needs to change, but not immediately.
``Now is not a good time for Americans to start saving,'' Bosworth said.
In the past, policymakers and economists had worried a low saving rate meant businesses had to turn increasingly to foreign investors for needed capital, leaving the economy vulnerable to sudden shifts in sentiment.
GONE NEGATIVE
According to Commerce Department (news - web sites) figures, the saving rate -- the portion of disposable personal income left over after spending -- has been in negative territory for some time. That means Americans either sold off assets or borrowed to maintain their spending.
----------------
Yup, its a house of cards waiting to come down. The only thing holding it up is the last ditch spending of 'consumers' who spend more than they earn.
If it wasn't so serious, it would be laugable.
The whole friggin' economy has gone completely crazy. Computer price wars. Plunging interest rates. Money supply SOARING. Foreign currencies plunging.
And now, the economic engine of last resort, the CONSUMER of last resort is only able to keep its head barely above water by spending faster than it earns. Deeper and deeper and deeper in debt we go.
Soon. Very soon, now.
The wave will hit. We'll never know from which quarter it will come. And, from wherever it comes, it won't be expected or anticipated.
Maybe Argentina. Maybe Brazil. Maybe Indonesia.
Who knows. But, it will come.
Soon. Very Soon, now.
