[copious.abundance]

Still goin' up!


http://www.bea.gov/briefrm/saving.htm

Sorry, no peak savings here!

[shortonoil]

Asset devaluation in the US during '08 amounted to $251,000 per household. Decline in home values amounted to $42,700 per household last year. Must be a new definition of “savings” going around.

Did BEA break out how much of these “savings” resulted from defaults and bankruptcies? If you don’t make the mortgage or CC payment the money stays in the bank a little longer.

There is no doubt about it, Americans are really stacking up the old cash. We’re working our way to riches! I bet CNBC spend all week talking about it.

[odegaard]

$this->bbcode_second_pass_quote('the48thronin', '.')..

They say figures never lie but liars sure can figure.. My brother the statistician says "numbers will tell you anything if you torture them long enough."

[odegaard]

$this->bbcode_second_pass_quote('the48thronin', 'S')aving more after taxes and percentage of disposable income are two different things entirely.

Look at the reality of a situation... If a man has 10$ a week in disposable income ( note not after tax income, but disposable income as in bea chart) and saves 1 dollar a week his percentage is 10%.
He saved 1 dollar.

If the same man under pressure of rising costs ( 2001 insurance etc and fuel spike,) last year fuel spike.. and his disposable income drops to 10 cents... but he saves a nickle... he has saved 50% but only 5 cents.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '.')..
Actually it makes more sense if you think it through a little more. During a recession people spend less and put away more of whatever disposable income they have to prepare for the apparent bad times ahead. You see this happen in every recession.

[copious.abundance]

Odegaard, get a grip.

It just so happens that the savings rate *always* rises during a recession, contrary to your supposed conventional wisdom. Here is a longer-term chart. If you look at the spikes and compare them to periods of recession, you'll notice they're the same. In fact, the 2 periods when the savings rate was the highest was for a brief spike during the 1974 recession, and then it topped out in the early 80's during that (severe) recession.


source

The numbers don't lie. Get used to it.

[ColossalContrarian]

$this->bbcode_second_pass_quote('odegaard', '')$this->bbcode_second_pass_quote('OilFinder2', '.')..
Actually it makes more sense if you think it through a little more. During a recession people spend less and put away more of whatever disposable income they have to prepare for the apparent bad times ahead. You see this happen in every recession.

[odegaard]

$this->bbcode_second_pass_quote('ColossalContrarian', '')$this->bbcode_second_pass_quote('odegaard', '.')..
step1: In a recession people lose their jobs.
step2: Unemployed people obviously cannot save money.
step3: In fact they burn through their savings like crazy or get into more debt.
step4: Therefore the "Total" Personal Savings Rate actually goes down in a recession.

[odegaard]

Ladies and gentlemen it's time for me to pull out my ultimate weapon.
*readjusts pants zipper*
Are you ready?

There are two ways to do this survey.
scenario 1:
You call up 10 people and ask them what is your savings rate?
9 people say 5% and one person says "I'm unemployed so I guess I'm saving 0%"
average = (9*5%+1*0%)/10 = 4.5% savings rate

scenario 2:
The problem with scenario 1 is the number Zero suggests an unemployed person is staying even.
That is false. An unemployed person is sinking deep into quicksand burning through his savings account.
Basically it's like a negative number.
A more accurate way to calculate:
The savings rate is equal to 1 minus the consumption rate (expressed as a decimal).
consumption rate equals what you spend divide by how much you make
Suppose the 10 people in the telephone survey all spend 95 and make 100 except for the last person who lost his job and is making 0.
average consumption rate = (10*95)/(9*100+1*0)=1.0555
average savings rate = 1-1.0555 = -0.055 = -5.5%
therefore in this example the average savings rate is a negative number all because only 1 out of 10 people lost their job.

Folks don't let the power elites fool you. The "savings rate" is not increasing.

[copious.abundance]

$this->bbcode_second_pass_quote('odegaard', '
')add on:
Notice that Oily2 does not address any of these issues that are being brought up by myself and others.
He is simply TROLL SPAMMING this thread with the same chart over and over again.

[vision-master]

I've been spending like a Jew lately.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '.')..
You are right odegaard - the Bureau of Economic Analysis knows nothing about economics and you know everything!

$this->bbcode_second_pass_quote('odegaard', '')$this->bbcode_second_pass_quote('OilFinder2', '.')..
You are right odegaard - the Bureau of Economic Analysis knows nothing about economics and you know everything!

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', 'Y')ou are absolutely correct - the BEA did not factor in unemployment. But there's a really good reason for that: The unemployment rate has absolutely nothing to do with the savings rate.

odegaard you need to make sure you know about something before you speak about it:

http://en.wikipedia.org/wiki/Saving
$this->bbcode_second_pass_quote('', '[')b]Saving in economics

In economics, personal saving has been defined as personal disposable income minus personal consumption expenditure. In other words, income that is not consumed by immediately buying goods and services is saved.

[odegaard]

Anybody here want to double check my math?

I do a survey and ask 10 people how much do you spend and how much do you make.
9 people spend 95 and make 100.
1 person spends 95 and makes 0 because he is currently unemployed. He is spending the money in his piggy bank.

Therefore:
consumption rate = (spend/income)*100 = (95*10)/(100*9+0*1)*100 = 105.5%
savings rate = 100%-consumption rate = 100%-105.5% = -5.5% a negative number

[Cog]

I have to go along with OF2 on the savings rate matter. One just has to look at a item like new car sales which have dropped over 40% year on year, to realize that people are not spending as much money as usual. My income has not went down and neither has the majority of people who work. That money not spent is translated into savings, or in my case, paying down debt.

Look at retail sales. All sharply down. For the majority of workers, their pay has not been cut. Median incomes of all US workers combined is only down slightly due to unemployment. But the vast majority of Americans are still employed, whether you use the official Bureau of Labor statistics or Shadowstats numbers.

What you are seeing is that those who are still working are being very cautious with their disposable income right now to see how things play out. And that my friends translates into savings.

[rangerone314]

They should teach the story about the ant and the grasshopper in the school systems. Maybe they have and people forgot. Americans are too much like the grasshopper.

The ant is a little smarter and stores up for hardtimes...

[vision-master]

$this->bbcode_second_pass_quote('Cog', 'I') have to go along with OF2 on the savings rate matter. One just has to look at a item like new car sales which have dropped over 40% year on year, to realize that people are not spending as much money as usual. My income has not went down and neither has the majority of people who work. That money not spent is translated into savings, or in my case, paying down debt.

Look at retail sales. All sharply down. For the majority of workers, their pay has not been cut. Median incomes of all US workers combined is only down slightly due to unemployment. But the vast majority of Americans are still employed, whether you use the official Bureau of Labor statistics or Shadowstats numbers.

What you are seeing is that those who are still working are being very cautious with their disposable income right now to see how things play out. And that my friends translates into savings.