Context is everything

Posted at 8:30 AM on February 2, 2009 by Bob Collins (3 Comments)
Filed under: Economy

A few years ago, when the economic experts were lamenting Americans' unwillingness to save money, this news today would've been greeting with smiles.

Personal savings surged in December to 3.6 percent of disposable income from 2.8 percent in November, the largest rate since May 2008.

But context is everything:

The Commerce Department said spending decreased by 1.0 percent after falling by a revised 0.8 percent in November.

The report from the Commerce Department also said Americans' personal income is dropping, even as we save more of less of it.

Wall St. opened lower.

---

Comments (3)

"Personal savings surged in December to 3.6 percent of disposable income from 2.8 percent in November, the largest rate since May 2008."

Sometimes behavior that benefits the individual has detrimental impacts for the larger group.

Posted by bsimon | February 2, 2009 9:18 AM

---

Tragedy of the Commons, all over.

Posted by JohnnyZoom | February 2, 2009 10:44 AM

---

This ties in to the spending vs. saving discussion in "What do you want me to do?".

Instead of the individual vs. group, how about considering short term vs. long term.

If I borrow and spend a lot, the short term effect is to keep others employed and keep consuming what others are producing. The long term effect is that I eventually run out of money and need to be bailed out.

If I consume only what I can afford and put a little money aside for a rainy day, the short term effect is that producers of non-essential items have less demand and need to reduce production. The long term effect is that consumers have resources set aside so they can continue spending when times are tight.

The current difficulty was caused by insufficient saving rates. To suggest spending as a solution is ridiculous.

P.S. The personal saving rate in the 70's and 80's was around 10%. At 3.6% we (as a nation) are far from frugal.

Posted by kennedy | February 2, 2009 10:45 AM

---

Post a comment

The following HTML tags are allowed in your comments:
+ Bold: <b>Text</b>
+ Italic: <i>Text</i>
+ Link: <a href="http://url" target="_blank">Link</a>
Fields marked with * are required.

Name*:

E-mail Address*:

URL:

Remember personal info?

Comments*:

Comment Preview appears above this form upon pressing the "preview" button. Edit your comment and press "preview" again, until you are satisfied with your comment.

Your comment may not appear on the blog until several minutes after it was submitted.

• E-mail this page
• Print this page
• Tweet this page
• Share this

Services

• Hourly Newscast
• HD Radio
• iPhone App / Mobile
• E-mail newsletters
• RSS feeds
• Podcasts
• Submit your photos
• Videos
• Weather
• Most e-mailed stories