Aug 3 2005

Zero. Zip. Nada.

The US personal savings rate fell to zero in June – its lowest level since the latest spending binge started (post 9/11) and the 2nd lowest since the Great Depression. You can read the full government report here (be sure to check out some of the tables – very interesting information).  Yes, the economy grew at a healthy annualized rate and clearly the Fed is still worried about inflationary pressure (we still have 50-100 basis points left to move in the fed funds rate) . But still – personal savings rate of 0%? We already lag behind the rest of the world in our ability not to spend pretty much all of what we earn (see here for a chart of US savings rates by quarter for the past 5 years) , and this trend shows no sign of improving.

I don’t get why these sorts of data don’t get more press.  It seems that yesterday’s announcement received little, if any, attention at all.  But our inability to save is a serious problem. Combined with deficit spending and our trade imbalance we’re increasingly reliant on outside capital to finance our collective lifestyle.  Ultimately these trends are not sustainable.

I don’t get why so few people seem to care . . .