Americans are spending everything they're making and more, pushing the national savings rate to the lowest point since the Great Depression.
That can't be good, right? Crutsinger speaks to several economic analysts to reinforce the fact that no savings equals a bad outlook for the nation's future, particularly baby boomers looking to retire.
But I have a real problem with some of the analysis into why Americans aren't saving.
This time the reasons for the negative savings rate are vastly different. Americans are spending all their incomes and then some because they feel wealthier because of soaring value of their homes, which for many Americans is the largest investment they own.
Hmm, I don't save very much money, but it isn't because of the soaring value of my home. I rent! The same goes for a lot of my friends. None of us are saving any money because we're just struggling to make ends meet. I'd love to save money. And sometimes I pull it off. But the fact is, I don't make enough money to save.
I don't go on vacations. I don't buy expensive large ticket consumer goods. I simply pay the bills: student loans, energy bills, car insurance, car payments and rent. All that adds up to a break-even lifestyle. Yeah, I work in an industry that profoundly undercompensates its employees. But a lot of my friends outside of the industry are also having trouble.
We don't "feel wealthier" because of the "soaring value" of our homes. We're just broke.
One question Crutsinger should have answered for himself before filing this story. What percentage of Americans don't own homes? And what is their savings rate? I bet it's just as low. And that's more troubling than the savings rate of homeowners. Wages in this country are stagnating more and more. A lot of people aren't saving money because they just don't have the money to save. They can barely keep up with the cost of living.
Cotsinger should be asking why that's happening, instead of listening to analysts who are pushing their latest white papers.
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