June 16, 2013

...AND RICHER...:

Americans have record wealth, but aren't spending it (Robert J. Samuelson, June 16, 2013, Washington Post)

In the economic history of our time, June 6, 2013, ought to occupy a special place. That's the day the Federal Reserve disclosed that the net worth of American households -- the value of what they own minus what they owe -- hit $70 trillion, a record that exceeded the previous peak before the 2007-09 financial crisis. Higher stock prices and a long-awaited housing recovery are slowly restoring Americans' lost wealth. [...]

There has been a stunning shift in behavior, notes Zandi. In 2006, at the peak of the housing boom, almost 90 percent of homeowners who were refinancing mortgages increased the size of their loan, according to data from Freddie Mac; they were borrowing against higher housing values. In 2012, 83 percent of refinancing homeowners either didn't change the mortgage amount or lowered it. They were striving to pay off debt.

Shifting from consumption to savings is one of the keys to replacing the Second Way welfare net.  Future reforms--consumption taxes, universal HSAs, privatized Social Security accounts, etc.--will all accelerate the trend.


Posted by at June 16, 2013 8:55 PM
  

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