Re: [TSP_Strategy] Lower Savings, Higher Credit


May 11, 2012

 


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#20495 May 11, 2012

Lower Savings and Higher CreditChart of the Week for May 11, 2012 -May 17, 2012

Theabove graph illustrates the average U.S. personal savings rate and thelevel of consumer installment credit over the past 20 years. The savingsrate is measured by personal savings as a percentage of disposableincome. Consumer installment credit includes most short- andintermediate-term credit, which is paid off in installments, excludingreal estate and including loans for items such as: automobiles, creditcards, mobile homes and home improvement expenditures.Over the past 20 years, Americans have saved an average of 4.2% oftheir disposable income each year. Between 1992 and 1998 the averagerate was somewhat higher, but it began to drop staring in March 1999.Americans began saving less, borrowing more and in many cases, becomingoverextended. During the most recent recession, which began in December2007 and officially ended in June 2009, Americans adjusted theirfinancial habits by saving more and paying down their outstanding creditbalances. But that trend may have reversed. Once again the savings ratehas dipped below the 20-year average and consumer installment creditappears to be rising. In fact, the March 2012 consumer installmentcredit level was 6.2% above its most recent low point of September 2010and the savings rate has dropped to 3.8%.Setting the right savings level is important for many reasons,including retirement security and the current rate appears to betrending down. On the other hand, increased savings and less debt couldreduce U.S. consumer spending at a sensitive time in the economicrecovery. Historically, consumer spending accounts for 60% to 70% of theU.S. economy. It is important for the economy as a whole thatindividuals find the right balance between saving, credit, and spending.



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#20497 May 11, 2012

This is sad really, hopefully this won't lead to another credit crisis down the road.Maybe high schools should implement a personal finance course and make it mandatory.I know that I would have benefited from one earlier.

On May 11, 2012 11:07 PM, "Sarah" sarah_oz@...> wrote:

>

> .

>

> Lower Savings and Higher Credit

> Chart of the Week for May 11, 2012 - May 17, 2012

>

> The above graph illustrates the average U.S. personal savings rate and the level of consumer installment credit over the past 20 years. The savings rate is measured by personal savings as a percentage of disposable income. Consumer installment credit includes most short- and intermediate-term credit, which is paid off in installments, excluding real estate and including loans for items such as: automobiles, credit cards, mobile homes and home improvement expenditures.>

> Over the past 20 years, Americans have saved an average of 4.2% of their disposable income each year. Between 1992 and 1998 the average rate was somewhat higher, but it began to drop staring in March 1999. Americans began saving less, borrowing more and in many cases, becoming overextended. During the most recent recession, which began in December 2007 and officially ended in June 2009, Americans adjusted their financial habits by saving more and paying down their outstanding credit balances. But that trend may have reversed. Once again the savings rate has dipped below the 20-year average and consumer installment credit appears to be rising. In fact, the March 2012 consumer installment credit level was 6.2% above its most recent low point of September 2010 and the savings rate has dropped to 3.8%.>

> Setting the right savings level is important for many reasons, including retirement security and the current rate appears to be trending down. On the other hand, increased savings and less debt could reduce U.S. consumer spending at a sensitive time in the economic recovery. Historically, consumer spending accounts for 60% to 70% of the U.S. economy. It is important for the economy as a whole that individuals find the right balance between saving, credit, and spending.>

>



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