[jdmartin]

I think this is both ends of the spectrum. On one hand, a lot of people I know that still have jobs have become very conservative with their money, and therefore are spending a lot less than they used to. I hesitate to call that "savings" because a lot of that spending was done with borrowed money, and hence they're simply not spending credit card money anymore.

On the other hand, there are a lot of people who don't have any disposable money anymore, and thus have dropped out of the economy altogether other than absolute basics. There are also a lot of people burning through IRAs, pension savings, and everything else they can get their hands on in order to live.

If you factor it all together, the idea of "saving more" is laughable. What has happened is that the pure amount of disposable cash - quite a bit of it obtained through credit cards, flipping houses, HELOCs, etc - has been drastically reduced, and thus the people that are still standing have held tight onto every dollar in anticipation of impending doom.

One other thing - as I've always said, all that "waste" and "foolish spending" is someone's job. If Americans truly are saving more that can only mean further catastrophe for the economy.

[Cog]

$this->bbcode_second_pass_quote('jdmartin', '
')
One other thing - as I've always said, all that "waste" and "foolish spending" is someone's job. If Americans truly are saving more that can only mean further catastrophe for the economy.

[Ludi]

$this->bbcode_second_pass_quote('Cog', ' ')When we stop spending money at Starbucks or buying new cars we do cost someone their job. But as an individual, what other choice do you have?

[Cog]

$this->bbcode_second_pass_quote('Ludi', '')$this->bbcode_second_pass_quote('Cog', ' ')When we stop spending money at Starbucks or buying new cars we do cost someone their job. But as an individual, what other choice do you have?

[Ludi]

$this->bbcode_second_pass_quote('Cog', ' ')But a lot of people weren't raised that way and certainly weren't encouraged by the media and government to live that way.

[Cog]

Do think Timmy Boy, Obama, or Bush thought that our way of life is unsustainable? Their policies tend to make you think otherwise.

Because if they did think it, I never heard them say it.

[yesplease]

$this->bbcode_second_pass_quote('Blacksmith', 'I')f you save your money will inflation not take most of it?

[odegaard]

$this->bbcode_second_pass_quote('Ludi', '')$this->bbcode_second_pass_quote('Cog', ' ')When we stop spending money at Starbucks or buying new cars we do cost someone their job. But as an individual, what other choice do you have?

[Ludi]

$this->bbcode_second_pass_quote('odegaard', 'L')udi are you trying to tell us you've never been tempted by the Starbucks frappuccino with whipped cream on top?

[Ludi]

$this->bbcode_second_pass_quote('Cog', 'D')o think Timmy Boy, Obama, or Bush thought that our way of life is unsustainable?.

[jdmartin]

$this->bbcode_second_pass_quote('Cog', '')$this->bbcode_second_pass_quote('jdmartin', '
')
One other thing - as I've always said, all that "waste" and "foolish spending" is someone's job. If Americans truly are saving more that can only mean further catastrophe for the economy.

[odegaard]

$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('Blacksmith', 'I')f you save your money will inflation not take most of it?

[copious.abundance]

$this->bbcode_second_pass_quote('odegaard', '1') person spends 95 and makes 0 because he is currently unemployed. He is spending the money in his piggy bank.

[odegaard]

Anybody here want to double check my math?

I do a survey and ask 10 people how much do you save and how much do you make.
9 people save 5 and make 100.
1 person is unemployed so he is burning through his cash.
He spends 95 and makes 0. Basically he is saving -95 a negative number

Therefore:
savings rate = (savings/income)*100 = (5*9-95*1)/(100*9+0*1)*100 = -5.5% a negative number
//
Don't let the power elites fool you.

[copious.abundance]

Let's try it this way . . .

Let's assume an unemployment rate of 10%.

10% of the people are making 1 - assuming that some unemployed people do get some income from somewhere
90% of the people are making 100
--------------------------------------------
So the total income is 91 (1*10% + 100*90%)

What is their spending? Let's say:

10% of the people are spending 50
90% of the people are spending 90 - assuming that in a recession even employed people spend a little less "just in case"
---------------------------------------------
So the total spending is 81 (50*10% + 90*90%)

If total income is 91 and total spending is 81 then you have a savings rate of about 11%.

Even if I assume an income of -5 for the unemployed 10% I get a total income value of 89.5, which is still greater than the 81 value for spending, and thus is a savings rate of about 9.5%.

Alternatively I could assume a higher spending value of 70 for the unemployed 10% . . .

10% of the people are spending 70
90% of the people are spending 90
---------------------------------------------
So the total spending is 88 (70*10% + 90*90%). This is still lower than the income value of 91 and implies a savings rate of about 3.3%.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', 'L')et's try it this way . . .
90% of the people are making 100
90% of the people are spending 90

[Tyler_JC]

Unemployed people reduce their spending dramatically in order to survive.

Who loses their job and continues to spend money at even close to the same rate as when they are employed?

The loss of income by the few million unemployed is more than made up for by the panicked savings of the rest of the population.

[ColossalContrarian]

Odegaard…. You’ve never been unemployed have you? I only say this because if you had been you’d be surprised how far you can stretch 20 dollars.

Just go ask people you know. Ask them if they’re saving more. I know I am. No more 4 dollar coffees -accept once in awhile. Look at the impact this depression has had on unimportant industries like coffee shops. Less people are spending $4 a day on espresso. Instead they’re saving that $4. Multiply that by every other unneeded expense.

[copious.abundance]

odegaard I was trying to mimic your calculation.

I do not understand where you got the "95" from for spending for both the employed and unemployed. 95 what? Percent of something? Dollars?

Let's say you interviewed 100 people. 10% were unemployed, 90% were employed.

Income
The income of the 10 unemployed people would be 0 (assuming no income from anywhere).= $0 total
Let's say the average monthy income of the 90 employed people was $2000 = $180,000 total (90 * $2000)
-------------------------------------------------------------------------------------------------
Total income among the 100 interviewees would be $180,000

Consumption
Let's say the average monthly consumption expenditures of the 10 unemployed people was $1500/month = $15,000 total
Let's say the average monthly consumption expenditures of the 90 employed people was $1800/month = $162,000 total
--------------------------------------------------------------------------------------------------
Total consumption of the entire group would be $177,000

Since savings = income - consumption, we get:
Savings = $180,000 - $177,000 = $3,000

Since we're talking about the savings rate: $3,000 / $180,000 = 1.66% savings rate.

So even though I assumed the unemployed people on average were in the hole to the tune of $1500/month, we still have a positive savings rate.

[odegaard]

$this->bbcode_second_pass_quote('Tyler_JC', 'U')nemployed people reduce their spending dramatically in order to survive. Who loses their job and continues to spend money at even close to the same rate as when they are employed?