Wednesday, May 02, 2007

Personal Savings Rate Numbers cause For Concern

The United States personal savings rate was a negative 1% for the first quarter of 2007. Middle and lower class Americans are finding it necessary to take from their savings to finance their daily lives.
"The amount of money Americans save as a percentage of their income has been declining for almost two years, and the March figures clearly demonstrate that we're not making any headway," Jeff Seely said. "A recent ShareBuilder survey found that over half of America does not have a financial game plan for their future. In fact, one in four Americans have no savings at all according to the latest retirement confidence survey from EBRI*. Combined with the negative savings rate, this lack of planning for the future could have severe consequences for the average American's retirement security."
I think the savings rate shows how under stress the middle and lower classes are in the United States today. With home prices, property taxes and medical care at record price levels and stagnant wages how can the average person save?
As recently as the 1980s, Americans' savings rate was stable at around 10 percent. In 2005, it sunk below zero. This marks the eighth consecutive quarter during which the U.S. personal savings rate was negative. The only other time in U.S. history when the savings rate has been this low for such a sustained period of time was during the Great Depression.
This is a dangerous trend that could lead the United States economy into recession when there is little to no more savings available for the average American family.

Read the rest of this article here.

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