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After months of consumer spending growing at a higher rate than income, this trend has reversed. Some speculate the higher spending was due to high foreclosure rates and people having more expendible income. What's your opinion?
http://money.cnn.com/2010/05/28/news/economy/personal_income/index.htm
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As we discussed in class on Tuesday, Americans have been riding a bubble and spending above their means for a long time. An increase in personal savings "may subdue the robust recovery some were hoping for but provide for more sustainable growth over the long term". While we may not see huge growth rates that some economists predicted, if Americans increase savings and live within our means we can expect real, sustainable growth in the future.
ReplyDeleteAmericans finally seem to be 'getting it'. They are saving for future uncertainties instead of simply expecting the best. It maybe a pessimistic view, but it is more grounded in reality than ignorant/ unnecessary spending. Hopefully, this will begin to change our culture so that people will stop living so blatantly beyond their means. That way our generation can have a future with progressive growth and financial sustainability.
ReplyDeleteWe are seeing increased savings, and much less spending. Finally, we don't go spend every penny we have available -- or more! I really believe we will reach a point where the increased savings won't be viewed as "bad" for the economy and that we will adjust to this level of spending...but I'm not sure when that will be.
ReplyDeleteI agree with Kelsey, the savings rate decreasing is at least a positive sign of consumer spending responsibility. The housing crisis was driven by poor consumer spending and although we want to promote consumer spending to stimulate the market, consumers need to be spending within their income levels.
ReplyDeleteI believe the increased savings rate is a positive sign as well. Although its not necessarily good that those who defaulted decided to spend their money since they no longer have to pay their mortgages. If anything they should be the ones saving. In the future it will be interesting to see whether we will continue this rate of saving or again turn to spending. There are positives of both and as we have seen, these indicators tell us little and we will have to look to more signs than those to determine the quality and placement of our current economy.
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