August 3, 2010

ECONOMISTS FINALLY GOT THE SAVINGS RATE THEY WANTED...:

Consumers find thrift, but lose fast recovery (Patrice Hill, 8/02/10, The Washington Times )

Figures put out by the Commerce Department on Friday show that the personal savings rate tripled during the recession and is hovering at more than 6 percent — a level not seen in decades. Although that newfound taste for thrift is helping to correct some long-standing problems, such as the chronic U.S. trade deficit with the rest of the world, it also poses an immediate obstacle for the economy because it is fueling sluggish growth.

Consumer spending normally is the biggest engine driving growth in the broader economy. It has been tepid throughout the recovery, posting growth at or less than 2 percent since last summer despite major spending incentives enacted by Congress, such as the "cash for clunkers" and "cash for appliances" programs encouraging Americans to trade in their energy-inefficient cars and home appliances.

The uninspired pace of spending growth is averaging half the 3 percent to 4 percent levels seen during the 2000s expansion.


...and it's predictably disastrous.

Posted by Orrin Judd at August 3, 2010 5:29 AM
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