For obvious reasons, Americans’ savings accounts are shrinking during this ongoing recession, both because there’s not as much money to deposit and many more reasons to make withdrawals. This has consequences for the economy’s long-term recovery prospects, as does another currently popular method of payment: the credit card. —KA
Reuters via Google News:
American households “have been spending recently in a way that did not seem in line with income growth. So somehow they’ve been doing that through perhaps additional credit card usage,” Chicago Federal Reserve President Charles Evans said on Friday.
“If they saw future income and employment increasing strongly then that would be reasonable. But I don’t see that. So I’ve been puzzled by this,” he said.
After a few years of relative frugality, the amount of money that Americans are saving has fallen back to its lowest level since December 2007 when the recession began. The personal saving rate dipped in November to 3.5 percent, down from 5.1 percent a year earlier, according to the U.S. Commerce Department.