Here’s some interesting news on the national savings front.
The nation’s savings rate has dwindled as consumers try to juggle rising prices and stagnant wages.
According to government data released Wednesday, the national savings rate was 3.5 percent in October, a slight improvement from the previous month but significantly below the 5 percent rate seen for most of the past two years. During the throes of the recession, the savings rate had skyrocketed above 8 percent.
“They spent it. That’s the short answer,” said Paul Dales, senior U.S. economist for Capital Economics. “It might be a lot of households don’t have a choice.”
Economists blamed higher gas and commodities prices for sending the savings rate to its lowest point since 2007. After remaining virtually flat in 2010, the consumer price index inched up this year as prices rose for essential products such as cotton and corn. Although consumers received bigger paychecks this year thanks to a payroll tax holiday, many found that the extra money was eaten up by increased fuel costs.
Another item to consider is that frugality is becoming less popular. Of course people are still looking for deals, but overall spending is up. We just had a record Black Friday and Cyber Monday, so people are flocking to the stores. Unemployment is still high, but more people perhaps are secure in their jobs after years of downsizing slows down.
