Savings rate "less than nothing"
By Lee Russ
Tuesday, January 10, 2006 at 08:41 AM
When the government's economists added up the data last week, they confirmed that November was yet another month in which America truly "lived on credit." Yes, the amount of money spent by all of us is estimated to have been more than all of us received in income during November. And the entire year of 2005 may, as noted in the San Francisco Chronicle, produce the first savings rate of "less than zero" since the great depression of the thirties.Excerpt from "Americans saving less than nothing"
Spending could outstrip income in 2005, which hasn't happened since the Depression
by Tom Abate, Chronicle Staff Writer, Sunday, January 8, 2006
When the Commerce Department recently tallied up consumer finances for November, it found that Americans shelled out more money than they took in. It was the seventh such month of red ink during 2005.
Kevin Lansing, an economist with the Federal Reserve Bank in San Francisco, tracks the personal savings rate -- the Commerce Department's measure of how much consumers have left after spending is subtracted from income. In November the savings rate was a negative 0.2 percent.
Given how much red ink households racked up in the first 11 months of last year, Lansing said the nation's personal savings rate could well be negative for all of 2005.
That, he added, would be "the first such occurrence since the Great Depression."
Maybe someone--or everyone--should send a copy of that to the White House so President Bush can work that into his speechifying about how great a job he's done with the economy.
How smart do you have to be to figure out that: this is really bad news, this is really unsustainable, and, if it was a business we were talking about, investors would be bailing out like the proverbial rats?