Americans saving less than nothing -- SF Chronicle

[wryter2000]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/01/08/BUG7IGJHEK1.DTL

"When the Commerce Department recently tallied up consumer finances for November, it found that Americans shelled out more money than they took in. It was the seventh such month of red ink during 2005.

<snip>

"Given how much red ink households racked up in the first 11 months of last year, Lansing said the nation's personal savings rate could well be negative for all of 2005.

"That, he added, would be 'the first such occurrence since the Great Depression.'

<snip>

"Amelia Warren Tyagi, who, with her mother, Harvard law Professor Elizabeth Warren, co-authored 'The Two Income Trap,' said debt nowadays ensnares not just the working poor, but also middle-class families with two wage earners. Tyagi said elevated costs for mortgages, health insurance, education and day care had eroded the purchasing power of the second paycheck."

Of course, they've "balanced" the doom and gloom with cheery rw estimates that all our houses are worth so much now, we're all on easy street. I guess the housing bubble will never go away. (I don't know about you all, but home equity loans don't strike me as a great way to support yourself when your income doesn't equal your expenses. And I don't feel like selling my house to get the equity, either.)

So much for Bush's fabulous economy.

[JDPriestly]

1. Those of us who save are not earning anything on our savings

That's how bad the economy is. My mutual funds (selected by a pretty good broker) did worse than my cds. None of my investments kept up with the inflation I really had to deal with (as opposed to the official inflation figures that include video games, etc. that I don't buy) considering energy cost rises. What kind of incentive is it to save if you don't make money on your savings.

In addition, wages are way down. That's a fact. No wonder Americans can't save. They have to work harder, longer and spend more just to maintain their standard of living. That's without improving their standard of living.

[China_cat]

5. We checked our bank's regular savings account

rate...highest in the area at a whopping 0.3%

[wryter2000]

6. No kidding

Good grief. I had no idea.

[napi21]

2. I'm sure it will be negative savings! People are putting ordinary

living expenses on their credit cards! Good paying jobs went away and the replacement jobs don't pay enough to keep up with the debt already incurred.

Most of US have been asking where this great economy is that Shrub keeps talking about, for a long time! I haven't seen it!

The only people who are doing WELL are those with incomes high enough to get all those un-needed tax cuts!

[CrispyQ]

3. Even if the housing bubble doesn't burst,

I know many people who have no equity in their homes. They have taken it out to finance new cars, vacations, furniture, stuff. My sister is one. I've wondered for a few years how they manage to afford all the stuff, new cars & vacations they take. Last year at Christmas the presents under the tree overflowed into the room. This year, significantly fewer presents & only one vacation planned this year as compared to the 3-4 in the past. I fear she has monumental credit card debt & zero home equity. :cry:

Living on your home equity -- yikes, that would have me biting my nails!

[wryter2000]

4. I'm so sorry about your sister

My husband and I lived on credit cards when he lost his job under Reagan. Using them for anything but buying things online and making reservations still gives me the willies. The day I have to get a home equity loan, I'll probably have to go on anti-anxiety drugs.

[On the Road]

7. I Understand These Negative Savings Statistics Do NOT Include

employer retirement plans.

Can anyone confirm whether this is true? If so, the savings rate would be dramatically understated.

Last year, I saved 11% through my employer 401k and had an additional amount added to a retirement plan. But the way the statistics are done might show that I had a zero savings rate last year.

[Democrats_win]

8. Purpose of neoconomics is to increase savings!

All those tax breaks were meant to encourage people to save. Those savings would translate into more money available for corporations to buy capital and create jobs. We all sacrificed our JOBS in 2001-2004 for this neocon dream!!!