1st Negative Savings Rate Since Depression
From the Boston Globe:
The Commerce Department reported that Americans' personal savings fell into negative territory at minus 0.5 percent last year. That means that people not only spent all of their after-tax income last year but had to dip into previous savings or increase their borrowing.
The savings rate has been negative for an entire year only twice before -- in 1932 and 1933 -- two years when Americans were having to deplete savings to cope with the massive job layoffs and business failures caused by the Great Depression.
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 the soaring value of their homes.
The Commerce Department reported that Americans' personal savings fell into negative territory at minus 0.5 percent last year. That means that people not only spent all of their after-tax income last year but had to dip into previous savings or increase their borrowing.
The savings rate has been negative for an entire year only twice before -- in 1932 and 1933 -- two years when Americans were having to deplete savings to cope with the massive job layoffs and business failures caused by the Great Depression.
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 the soaring value of their homes.
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