Negative savings?
Averages may mean very little, but twelve months of negative average savings for Americans seem pretty crazy!
http://www.startribune.com/484/story/525849.html
Americans' personal savings rate, the amount of saving left from disposable income, dipped to a negative 1.7 percent in May, down from a negative 1.6 percent in April. The savings rate has been negative for 12 consecutive months, meaning that Americans are dipping into savings or borrowing more to finance a spending level that is exceeding their after-tax incomes.
I guess it is savings relative to income. So it I earn $1000 in a month and spend $1017, then I have a negative 1.7% savings rate for the month.
Definitions are vital in any statistic, and so I'm actually surprised the numbers are as close as that. I don't even know how to measure MY savings rate. If I'm paying extra money to my mortgage principle, is that savings? My DEBT is going down fast ($-wise, even if not %-wise). If I say my "base" spending is say $15k/year and income $45k/year after taxes, then my "savings" is $30k/year? (hidden in debt reduction, and investments in 401k, Roth IRA, CDs, stocks, etc.)
AND WORSE, if there's others like me "saving" $30k/year, then OTHERS must be deficit spending far beyond their means. Well, I know, there's a distribution of savings, a few who save a lot, and a few who are temporarily spending down savings, and most in the middle.
I guess the value in average trends, like a savings rate, is to just show a general direction of economic activity. I don't know if a "sign" positive/negative is important, but higher and lower would seem to be.
So we should save more? Easy for me to say with no dependents and a good job. But I am yet scared and I don't trust this economic engine to continue running debts everywhere!
http://www.startribune.com/484/story/525849.html
Americans' personal savings rate, the amount of saving left from disposable income, dipped to a negative 1.7 percent in May, down from a negative 1.6 percent in April. The savings rate has been negative for 12 consecutive months, meaning that Americans are dipping into savings or borrowing more to finance a spending level that is exceeding their after-tax incomes.
I guess it is savings relative to income. So it I earn $1000 in a month and spend $1017, then I have a negative 1.7% savings rate for the month.
Definitions are vital in any statistic, and so I'm actually surprised the numbers are as close as that. I don't even know how to measure MY savings rate. If I'm paying extra money to my mortgage principle, is that savings? My DEBT is going down fast ($-wise, even if not %-wise). If I say my "base" spending is say $15k/year and income $45k/year after taxes, then my "savings" is $30k/year? (hidden in debt reduction, and investments in 401k, Roth IRA, CDs, stocks, etc.)
AND WORSE, if there's others like me "saving" $30k/year, then OTHERS must be deficit spending far beyond their means. Well, I know, there's a distribution of savings, a few who save a lot, and a few who are temporarily spending down savings, and most in the middle.
I guess the value in average trends, like a savings rate, is to just show a general direction of economic activity. I don't know if a "sign" positive/negative is important, but higher and lower would seem to be.
So we should save more? Easy for me to say with no dependents and a good job. But I am yet scared and I don't trust this economic engine to continue running debts everywhere!
posted by Ares Olympus at 11:53 AM
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