Nothing to see here!
Americans spent more than incomes last year, pushing the personal savings rate down to the lowest level since the Great Depression, the government said Thursday.Remain calm! All is well!
The Commerce Department announced today that the national savings rate is negative one percent. Not only is the average American family (including two income families) unable to accrue a meaningful financial cushion; people everywhere are going into debt just to get by. Higher education costs are outpacing inflation. Property taxes are soaring because states and municipalities must cover programs cut or scaled back by the federal government. Few American workers have pensions on which they can rely. Health care costs comprise an increasing percentage of income. The list goes on and on.
President Bush’s reaction to the situation is somewhere between inadequate and nonexistent. Yesterday the White House released its State of the Economy report. The only context in which it mentions saving at all is in promoting decreased taxes on education, investment, and retirement saving. But that seams to put the cart before the horse: lower marginal tax rates on savings that people don’t have are worthless to those most in need of assistance.
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