Thursday, March 09, 2006

Negative Household Savings

This article ran last week in the USA Today:

"The nation's dismal savings rate is the focus of a sharp debate: This can't go on forever, some economists say. We spend and borrow too much, we save too little, and in the long run, it spells trouble for individuals and the nation. Nonsense, others say. We might be dipping into our savings, but that's a deep well: Household assets - swollen by rising home equity - stand at $62 trillion, according to the Federal Reserve."

My comment: The savings rate calculations don't take into account events such as when a consumer's assets (house, stocks, etc) appreciate, and he or she spends some of it. So it might not be as dour as some like to paint it. To read the full article, click here


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