Americans saving less than nothing Spending could outstrip income in 2005

[RamboLiberal]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/01/08/BUG7IGJHEK1.DTL

When the Commerce Department recently tallied up consumer finances for November, it found that Americans shelled out more money than they took in. It was the seventh such month of red ink during 2005.

Kevin Lansing, an economist with the Federal Reserve Bank in San Francisco, tracks the personal savings rate -- the Commerce Department's measure of how much consumers have left after spending is subtracted from income. In November the savings rate was a negative 0.2 percent.

Given how much red ink households racked up in the first 11 months of last year, Lansing said the nation's personal savings rate could well be negative for all of 2005.

That, he added, would be "the first such occurrence since the Great Depression."

[Straight Shooter]

1. Amazing how little you save when your income is slashed in half.

Without going into personal details, up until a few years ago I was on a pretty good track for savings.

Thanks, bush. :banghead:

[LEW]

2. Of course, what we have budgeted for savings

has gone to the doubled heating bill, gas and food. Shrub has not only failed in Iraq, this admin has failed here too. I didn't vote for him but still have to pay the consequences!

[mom cat]

6. He was not elected and we are all paying the consequences.

[cantstandbush]

3. Non-wealthy Americans aren't saving because they feel that they

will never be able to "save" enough to enjoy life. Why leave all the good things and fun things to the rich to enjoy in the prime of their lives while average working men and women who work hard for a living don't see any other hope for them to enjoy some of the luxaries of life without going into debt (just like the government). Housing, transportation, and food (survival items) take all of two incomes to meet the basics. In order for a lot of Americans to have education, medical care, computers and other technological items, vacations, nice clothes, and some entertainment most have to go into debt to afford them.

"Life is a bitch. And then you die!"

Folks are tired of seeing the corporate criminals and political sleazeballs amassing huge sums of wealth through their crimes and unfair practices so a lot of people are saying "the hell with it. I am going to get a piece of the pie anyway I can." I am not condoning this as a way of life but I am pointing this out as an observation.

[llmart]

9. I agree with your analysis.......

with TV showing how the other half lives and flaunting it 24/7, people start to think, "hey, I work hard too and what have I got to show for it?" So, in an attempt to get a piece of the pie, they go into debt. I'm not condoning it either and I don't do it, but it's a natural reaction.

[Warpy]

4. Check out your neighbors in the burbs

because chances are that the majority of them are floating a lot of everyday expenses on credit cards they have little hope of paying down until and unless the job and wage situations change radically.

Deficit spending has been supporting the burbs for years.

[high density]

5. oh what joy

The lame economy Bush has stuck us with here is 100% propped up right now by consumer spending and when the credit line runs out we're all going to be in a world of hurt.

[RamboLiberal]

7. With Credit Card payments doubled that line of credit

will run out this year. Add on energy prices including gasoline going back up and I have the feeling '06 is going to be bleak except for the wealthy.

[AndyTiedye]

8. And They Can't Declare Bankruptcy Anymore

[KayLaw]

10. Many reasons, IMO

Inflation is killing us, no matter how it's spun away. It seems every week something is going up in price. Our power company added a big fuel charge to our bill and are getting another big rate increase this month. Gas is much higher than in the past as are local taxes. Groceries are higher and our insurance company raised rates because, as they stated, inflation has driven up the costs of building materials. I think the P.O. is raising their rates this week.

Like someone said, everyone on TV appears to be rich, a point made in The Tightwad Gazetted, but lately, I think it's been the fuel prices and the wealth effect of the housing bubble. People believe their houses will just continue to skyrocket in value, so why bother to save the old fashioned way?

[Mountainman]

11. My income was cut $25,000 a year for 8 months. I'm still not able to

catch up with my bills. You can't make two car payments and two house payments and two of every other payment you owe. I have to sell things to get the money to catch up. My credit score must be a negative 1000 by now. And the wife's job may go away soon since they are not making a profit.

I don't feel bad when I get the collections calls, I just tell them to wait a minute and I'll pick a couple of 100 dollar bills off my money tree and send to them.

[skids]

21. Tell them this:

Well, you're going to have to start sending me mail instead, because I'm going to have to cancel this phone line soon to pay oher bills.

:-)

[SoCalDem]

27. Duh!

buying power has been stagnant or receding for more than THIRTY YEARS..surprise surprise:)

[Ezlivin]

12. Wait 'til the line of home equity credit is all used up

Then we'll see lots of foreclosures.

Many people here in the 'burbs are funding their lifestyles off of home equity lines of credit. They may have started out paying off credit card debts, but then they continued to shop and increase their debt.

With the change in the bankruptcy laws, I believe a lot of people are going to struggle and fail this year. But it will be largely a "silent" financial disaster because the liberal media doesn't want this news to slip out and affect people's spending habits.

[sarcasmo]

13. Kick and Nom. This is why they pushed the Bankruptcy bill through so fast.

Don't forget that just last week they reported about our rosey job market.

[Roland99]

14. "savings rate has been offset by another factor -- rising home prices"

:wtf:


Are they serious? Rising home prices? Didn't they notice the housing bubble is starting to burst? And, even then, those rising home prices don't mean there is tons of equity sitting out there untapped.

These people are blithering idiots!

[mcscajun]

16. Savings rate has been offset by another factor -- UNDERemployement

and UNemployment.

My mortgage payments are currently coming OUT of the savings I was diligently putting aside before my work got shipped to India.

So I guess you could say, quite rightly, that I currently have a Negative Savings Rate.

[Roland99]

18. You speak true.

[JusticeForAll]

26. They probably meant

housing prices that already rose...lots of people are locked into situations they cannot afford (now or then)

[AnneD]

15. It pains me to see this happening in America...

I beg you...try a radical solution. I listen to and bought David Ramsey's Total Money Makeover and am currently on the baby steps. I have not used a credit card in 2 yrs. I have an emergency fund in the bank and have been paying my debts off one by one. It has been a real help to me. There is nothing really new in his ideas, but it has worked for us.
I fear that with increased fuel costs, inflation pressures, and increased minimum credit card payments, people are going to be hit really hard. I think we will see a recession if not a depression. All of these chickens will come home to roost.
I feel for those that will be upside down in their homes and car loans (you owe more than it is worth). A job loss, illness, or salary cut is going to bring people to their knees. I can't stress enough that we all need to get our financial act together ASAP.

[jasmeel]

17. I know I've got zero savings right now. Any thoughts on why

it would behoove the * admin to keep Americans without any savings? I guess it helps the economy if we're spending and not saving. Other thoughts?

[AnneD]

19. Maybe....

they want us too sell our children to the military....

[central scrutinizer]

22. part of their terror campaign

if you keep workers scared and close to the edge, the balance of power swings solidly to the corporatists. Workers will bend over and take any cut in benefits to keep some money coming in. Keep the working class fighting among themselves - blame the environmentalists, the immigrants, etc. for your situation instead of working together to work for economic justice for all.

[lovuian]

20. I'm blaming this on the credit card industry...

its their fault and the healthcare system needs to be socialized

the greed of Republicans just like Hoover and Coolidge had 90% of America's wealth in the hands of a irresponsible few ...

it caused the Great depression

its a matter of time...the wealth of America are in the hands of a few...

[klook]

23. The nation is just following *'s lead

I thought the Republicans said deficits don't matter. :eyes:

[Rex]

24. The BFEE broke the bank, now we all pay the bill.

See what happens when you ignore the U.S. Constitution?

[NMMNG]

25. Is it any wonder?

Gasoline prices can go up anywhere from 10% to over 50% at the drop of a hat. Utility prices have nearly doubled for many in the wake of Hurricane Katrina. Food prices are always on the rise as are those of other essentials. Credit card interest can be anywhere from 7%-25%, and mortgage interest around 3%-8% or more.

If I am lucky I will get an increase of 2-3% each year at my two jobs. I was lucky at one of my jobs this year, but not at the other. Needless to say none of my costs of living went down, nor did any of them increase by a mere 2-3%. So how am I supposed to do this extravagant saving that all of the experts recommend?