I can understand his logic to some degree. Factor out retiriees’ habits and the savings rate goes from -1% to +3%. Still pretty meager, though.
The author also puts a lot of stock in the avg consumer’s “balance sheet/net worth”, but that is factoring in someone’s house appreciation… which is a tenuous thing these days.
It’d be nice to find a study that filters out a lot of the noise in the “savings rate” discussion.
I agree with his hypothesis that the personal savings rate is not a perfect measure but his contention that if increases in net worth were used the savings rate would average 33% for the last 10 years is preposterous.
This is precisely the kind of thinking that has so many Americans in tough financial situations today. The AP just put out a story about home equity in America being the lowest since World War II. Too many have counted on this “investment” going up and leveraged home purchases 100% to now see the value drop dramatically.
Money in a 401k is for retirement, not true savings for emergencies, etc.
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Here’s an article with a dissenting view.
http://time-blog.com/real_clear_politics/2007/02/personal_saving_rate_is_a_misl.html
I can understand his logic to some degree. Factor out retiriees’ habits and the savings rate goes from -1% to +3%. Still pretty meager, though.
The author also puts a lot of stock in the avg consumer’s “balance sheet/net worth”, but that is factoring in someone’s house appreciation… which is a tenuous thing these days.
It’d be nice to find a study that filters out a lot of the noise in the “savings rate” discussion.
I agree with his hypothesis that the personal savings rate is not a perfect measure but his contention that if increases in net worth were used the savings rate would average 33% for the last 10 years is preposterous.
This is precisely the kind of thinking that has so many Americans in tough financial situations today. The AP just put out a story about home equity in America being the lowest since World War II. Too many have counted on this “investment” going up and leveraged home purchases 100% to now see the value drop dramatically.
Money in a 401k is for retirement, not true savings for emergencies, etc.