May 21, 2006
HERE'S $53 TRILLION, CALL SOMEONE WHO CARES:
Hey, big spender! Save yourself (MARY WISNIEWSKI, 5/21/06, Chicago Sun-Times)
The last time the U.S. savings rate was negative was 1933. The unemployment rate hit 25 percent, and more than 4,000 banks had closed.It's hard to save money when you're selling apples on the corner.
In 2005 and so far in 2006, the savings rate is negative again -- we're spending more than we're saving. Unemployment is 4.7 percent, and the stock market is up almost 29 percent since the dark days of September 2001.
It looks like we're doing OK -- at least better than we were in the Great Depression. [...]
Personal savings peaked in World War II, when many households had a woman in a factory and a man at the front, and wartime rationing left little to buy. It has been on a downward slide since 1984, when the rate was 10.8 percent.
There are limits in the way the savings rate is measured. It doesn't consider assets or capital gains. Rising home and stock values have helped Americans grow their nest eggs and helped offset both poor savings and inflation, according to a study by A.G. Edwards & Sons, a financial services firm.
So the savings rate has fallen in direct proportion to the revival of the stock market, the creation of 401k's and IRA's and the corresponding stratospheric rise in household net worth? No wonder this isn't quite the Great Depression, huh?
MORE (via David Hill, The Bronx):
Boomers bet on property for support (Mindy Fetterman, USA TODAY)
Real estate ownership has become a key part of boomers' retirement plans, says Alicia Munnell, director of the Center for Retirement Research at Boston College. That's largely because the national savings rate is so low, she says, and the availability of pensions is declining.Unlike previous generations of retirees who tended to pay off their mortgages and live "rent-free" in retirement, many boomers see their homes as money in the bank, Munnell says. Many previous retirees also chose to hang on to a house to pass down to their children.
By contrast, boomers are more likely to use the equity in their homes, through home equity loans or reverse mortgages, to finance purchases or to help fund their retirements, Munnell says.
"In the old days, you knew you had your house to live in when you retired," Munnell says. But given most boomers' modest retirement savings, "You really are not going to be able to hold on to it and not touch your house. You're going to need the money in your house."
For boomers, vacation homes aren't seen as merely a chance to have fun in the sun or on the ski slope or at the lake. Four in 10 boomers who own a vacation home intend to make it their primary home eventually, the NAR survey found.
At the point where you think folks who own two houses but don't have a passbook account haven't saved enough you aren't discussing reality, nevermind real estate.
MORE/MORE:
Give and take across the border: 1 in 7 Mexican workers migrates -- most send money home (Carolyn Lochhead, May 21, 2006, SF Chronicle)
The current migration of Mexicans and Central Americans to the United States is one of the largest diasporas in modern history, experts say.Posted by Orrin Judd at May 21, 2006 1:03 PMRoughly 10 percent of Mexico's population of about 107 million is now living in the United States, estimates show. About 15 percent of Mexico's labor force is working in the United States. One in every 7 Mexican workers migrates to the United States.
Mass migration from Mexico began more than a century ago. It is deeply embedded in the history, culture and economies of both nations. The current wave began with Mexico's economic crisis in 1982, accelerated sharply in the 1990s with the U.S. economic boom, and today has reached record dimensions.
What a maroon.
Mary needs to define what she means by "savings rate." Does she mean those accounts which came with little passbooks which we used to take to the bank and have the teller stamp in our balances? Those haven't been around for a while now. Likewise, those little envelopes in which my mother-in-law put the money for her monthly bills are pretty much out-of-date now too. Does that mean we aren't paying our utility bills either?
Posted by: erp at May 21, 2006 2:46 PMWow! Travis Tritt is worth that much? Is this a great country or what? (pretty great country singer, too)
Posted by: jdkelly at May 21, 2006 5:59 PMAnother statistic often cited by the MSM is stagnant wages, conveniently omitting the big increases in employee benefits.
Posted by: Gideon at May 21, 2006 9:18 PMYou would think the govt would put 2 and 2 together and adjust the savings measure to reflect the new reality. But then the MSM would have to hunt harder for more bad headlines/themes.
Posted by: AWW at May 21, 2006 10:27 PMI clicked on the chart Orrin displays to demonstrate the "stratospheric rise in household net worth," which actual shows it at the same level as 1999. Showed it to the wife. She said: "Is he, like, a moron? Did he ride the short bus to school?"
Posted by: Rick Perlstein at May 21, 2006 11:54 PMRick:
Exactly. Back above where it was prior to the stock market crash. The rise is since 1984 and gives us both the highest savings rate in our history and he world:
www.brothersjudd.com/blog/archives/2006/04/the_hidden_reag.html
Not to mention that we are uniquely capable of such per capita numbers even as we grow our population at a rapid rate.
Alas Mr. and now Mrs. Perlstein, try as they may, are unable to provide evidence to refute the obvious, i.e., our limitless prosperity is founded on personal freedom and capitalism and the non-Anglospheric world's limitless poverty is founded on the polar opposite, collectivism and socialism.
Slightly o/t. The guy challenging Joe Lieberman in Connecticut, Ned Lamont, is another far left moonbat who made his billions in the cut throat world of TV cable. Perhaps Rick could explain why the left is riddled with billionaires and millionaires while the right is labeled the party of the rich. Could the media be misleading the public about this?
erp:
Most journalists start out wanting to be Woodward and Bernstein (or, for more modern examples, David Gregory or Katie Couric). After a time, they want to be Rupert Murdoch (rich). Not that they would ever admit it.
Posted by: jim hamlen at May 22, 2006 10:01 AMMr. Perlstein, $1 TRILLION has been added to retirement funds in 2005 over 2004 - We sent from $13 TRILLION to $14 Trillion, about 1/2 is in IRAs and deferred compensation - that was either in the WSJ or IBD w/in the past couple of weeks.
You never indicated whether or not you wanted to talk to my mother who actually grew up poor and had an outhouse for the first 10 or so years of her life.
---
And here's food for thought, too, children are treated as an expense instead of an investment. Do you think that would change the savings rate?
Posted by: Sandy P at May 22, 2006 10:08 AMerp - email her and tell her that. Her response would be enlightening.
Especially since there was a question that if I'm saving in my IRA, isn't that enough?
I'll do it, I live in the area.
Posted by: Sandy P at May 22, 2006 10:15 AMSandy, I'd be delighted to oblige. Whom shall I email and what shall I tell her?
Posted by: erp at May 22, 2006 10:36 AMIf you click on the article and scroll down, her email is there.
Ask her the question you posted.
Can you also ask her if she's ever read either Dr. Thomas Sowell's Basic Economics, A Citizen's Guide to the Economy or PJ O'Rourke's Eat the Rich?
(Cos if she had, the article wouldn't have come out the way it did. She would have educated her readership, instead of scaremongering.)
Posted by: Sandy P at May 22, 2006 11:19 AMSandy, an email won't be necessary, I have a feeling Mr. and Mrs. P. monitor our primitive bleatings here regularly for the frequent fixes they need to feed their superiority complexes.
Posted by: erp at May 22, 2006 1:49 PMActually, we in territory where Rick steps very carefully, because he knows that Bill Clinton's claim to being anything other than a seedy character and C- president depends upon the tech bubble. No tech bubble, no "surplus." No tech bubble, no overheated labor market. No tech bubble, no stratospheric approval ratings. No tech bubble, no teflon coating when Lewinsky broke. So, no tech bubble, arguably no GWB.
Posted by: David Cohen at May 22, 2006 2:38 PMThe Tech Bubble was an effect of the Peace Dividend, not the cause of the prosperity.
Posted by: oj at May 22, 2006 3:14 PMNuh uh
Posted by: David Cohen at May 22, 2006 6:09 PM