Friday 5 June 2009

Americans rediscover savings

In April, Americans saved almost six percent of GDP; the highest savings rate in over 15 years.

The surge in savings mirrors the US federal deficit. As the government goes deeper into the red, households are building up savings. Americans recognize that today's government deficit is tomorrow's tax hike. Therefore, they are accumulating resources now, to compensate lower future disposible income.

This is why Keynesian fiscal stimulus packages never work. It is a lesson that the clowns down at the UK treasury have forgotton.

3 comments:

Anonymous said...

Just curious - what is the UK savings rate right now?

Anonymous said...

I don't know, but I am saving like a squirrel and not spending on anything but food. And I have no debts, great income. So, what are other people up to?

Chris said...

Being an American, I think the savings rate is in the US are increasing because people are losing their jobs and they want something under them rather than "tax hike" concerns. I think it is more immediate than that.