Spend, Spend, Spend
From The Northern Trust web site: an excellent dissertation on our profilgate spending...
In the past month, there have been two articles (“American Savings Understated by Most Conventional Measure,” Marc Chandler, Financial Times. March 8, 2005 and “Running on Empty?,” David Malpass, The Wall Street Journal, March 28, 2005) in which the authors argue that household saving is being underestimated.
The dollar-value change in total household liabilities (from Federal Reserve flow-of-funds data) shows that in 2004, households’ total borrowing represented 12.5% of their total spending – the highest percentage since the 1952 start of the series.
Starting in 1999 and continuing through 2004, households’ cash outlays on goods, services and tangible assets have exceeded their cash incomes. From 1952, the beginning of these data series, through 1998, this phenomenon of households spending more than they were taking in had never occurred.
In 2004, total household spending represented a record 75.8% of GDP.
If spending more than you take in is evidence of a strong propensity to save, then perhaps George Orwell’s Ministry of Truth has actually come into existence and is being run by Chandler and Malpass.
Households Running on Empty
In the past month, there have been two articles (“American Savings Understated by Most Conventional Measure,” Marc Chandler, Financial Times. March 8, 2005 and “Running on Empty?,” David Malpass, The Wall Street Journal, March 28, 2005) in which the authors argue that household saving is being underestimated.
The dollar-value change in total household liabilities (from Federal Reserve flow-of-funds data) shows that in 2004, households’ total borrowing represented 12.5% of their total spending – the highest percentage since the 1952 start of the series.
Starting in 1999 and continuing through 2004, households’ cash outlays on goods, services and tangible assets have exceeded their cash incomes. From 1952, the beginning of these data series, through 1998, this phenomenon of households spending more than they were taking in had never occurred.
In 2004, total household spending represented a record 75.8% of GDP.
If spending more than you take in is evidence of a strong propensity to save, then perhaps George Orwell’s Ministry of Truth has actually come into existence and is being run by Chandler and Malpass.
Households Running on Empty
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