The Ownership Society?
By Justin Gardner | Related entries in Economy, MoneySomehow, I don’t think this is what Bush meant…
WASHINGTON – People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.
For December, consumer spending rose a solid 0.7 percent, the best showing in five months, while incomes rose by 0.5 percent, both figures matching Wall Street expectations.
Not since the Great Depression have we saved less! Wow, I guess advertising really does work. More like the Oweashitload Society, eh?
But how do we turn this around? Plain and simple it boils down to education, but something tells me that’s not gonna be too successful in the short term. People want to consume, and it’s just gonna get worse if Americans don’t slow the hell down with whipping out those credit cards. Of course, the government has no problem with deficit spending, so why should we? Oh, that’s right, because people will actually come and collect on our debts…
Amazing.
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February 1st, 2007 at 9:53 pm
Mr. Gardner; Now you’ve struck a chord with me. I can’t understand why more people don’t get alarmed by this sort of data. When you spend up to one quarter of every dollar on interest paymnts somebody at the other end of that deal is getting very wealthy.
Allowing consumers to spend more than they have is easy money and a win/win situation for many, because if they default the expense is tolerated and passed on. But how do we, as a society, get control of this problem – if it is even a problem?
For the Rebublicans, God forbid anyone who gets in the way of someone tryin to make an honest buck. It’s the American way. If you try to regulate it, as the Dems have and continue trying, then you’re branded a socialist, liberal commie for limiting good business practice. Doesn’t it seem contradictory that a conservative minded person has no problem with people spending too liberally and over-extending their debt? Something doesn’t make sense – maybe because it makes someone lots of cents $ $ $
February 1st, 2007 at 11:53 pm
Since the savings rate doesn’t count things like home equity, retirement accounts and stock appreciation, I’d be wary about placing too much faith in that number. As this link points out, it’s essentially a measure of cash flow rather than net worth.
Our saving rate does indeed stink, but we’re not nearly as bad as this stat makes it seem.
February 2nd, 2007 at 10:17 am
I think that BenG and Sean have good points: the financial corporations are making a tremendous amount of money off the interest rates on credit cards; and, that the savings rate doesn’t include IRAs, 401Ks, Roths, etc. However, I should point out that many Americans don’t put money into any kind of retirement fund, either because they don’t have the money available or they wish to spend their money elsewhere. I believe that consumerism has been drummed into our heads since childhood and this indoctrination has become a part of our culture. Additionally, our leadership has encouraged our spending habits as a way of keeping this economy afloat. I don’t think this will change without some major financial catastrophe such as the great depression.
February 3rd, 2007 at 1:02 pm
Consider too, the effect that reducing spending by, say, even 5% might have on the economy.
Add to that the fact that a whole political movement is based upon the premise of having the economy steaming ahead rather than contracting and it is not hard to see why personal overspending is not a popular topic.
Never mind, lads, it is nothing more than Capitalism 101…
February 5th, 2007 at 2:48 pm
SNL even did a skit about this…
http://www.dailymotion.com/video/xt0c6_snldontbuystuff
February 6th, 2007 at 5:09 pm
James;
Just saw your link – that was great. It may only happen one out of every four skits, but when SNL hits the mark it’s REAL funny, like this one.
Fast forward to present and you could do a ‘Stuff-You-Shouldn’t-of-
Bought.com reselling all the stupid stuff you’ve gathered through the years. You could sell it for pennies on the dollar to people who can’t afford the stuff brand new – oh yea, we already have that – Ebay !
Thanks for the link, I’ve already forwarded it.
February 7th, 2007 at 12:31 am
More fake Congresswoman spam. Please leave us alone; I’m not going to watch your stupid play.