savings rate posts
FeedPosted Aug 20th 2010 3:00PM by Sheldon Liber (RSS feed)
Filed under: Apple Inc (AAPL), Berkshire Hathaway (BRK.A), Market Matters, Politics, Chasing Value™, Recession, Financial Crisis, EZCORP (EZPW), Ebix Inc. (EBIX), Fiserv Inc (FISV), Portfolio Recovery Associates (PRAA)
Government debt is expanding -- again! At the same time corporate coffers are
overflowing some $1.6 trillion with reserve capital, not counting financial institutions. In some instances they have more money than any state in the Union and most small countries.
Chasing Value: Apple's Holding $48 Billion -- For What?
Here's a shocker -- personal savings continues to increase. When the (false) economy was booming valuations for everything were spiraling out of control, leverage was extreme, and the savings rate was next to nothing. Everyone wanted to join the party and most people stayed at the party to long, which did not end well. The savings rate has not been so high in a decade as people reduce their debt and streamline their personal budgets.
Continue reading Chasing Value: Four Great Stocks -- Gov't Fears Savings Spiraling Out of Control
Posted Aug 5th 2010 5:10PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts
A senior official overseeing the world's largest bond fund says there is a 25% chance that the United States will encounter deflation and a double-dip recession.
"I do not think the deflation and double-dip is the baseline scenario, but I think it's the risk scenario," Mohamed A. El-Erian, chief executive officer for Pimco,
told Bloomberg News Thursday. He added that U.S. unemployment will probably stay unusually high.
El-Erian said companies accumulating cash and saving by individuals are making it tougher to fight deflation. In June, the U.S. savings rate
rose to 6.4%.
Continue reading PIMCO: 25% Chance of Deflation in U.S.
Posted Feb 1st 2010 4:15PM by Joseph Lazzaro (RSS feed)
Filed under: Recession
The key data point in December's personal income and outlay data? Arguably, the U.S. savings rate, which rose to a
4.8% annual rate -- the highest since June 2009 -- and up from 4.5% in November, the U.S. Commerce Department announced Monday.
In other words, the era of the 'frugal consumer' continues. Also in December, real consumer spending rose at the slowest pace since September, moving up just 0.1%, the Commerce Department said. In Q4, real spending rose at a 2% annual rate; however, real spending is down 0.5% since December 2007, or when the recession began roughly two years ago. Further real, after-tax incomes rose 0.3% in December.
Continue reading 'Frugal Consumer' Era Continues: U.S. Savings Rate Rises to 4.8%
Posted Jun 26th 2009 2:00PM by Sheldon Liber (RSS feed)
Filed under: Rants and Raves, Money and Finance Today, Economic Data, Personal Finance, Politics, Headline News, Recession, Financial Crisis
We live in amazing times. Consumers are earning more; at least the ones with jobs.
They are also saving more than they have in the last 15 years. The savings rate, which was hovering near zero in early 2008, surged to 6.9 percent, the highest level since December 1993. I think that is fantastic!
Ben Franklin said, "A penny saved is a penny earned". If that is true, then people are improving their economic condition day by day. Strange as it might seem, the government is troubled by this.
The government and many economists are worried that without greater spending by consumers any economic recovery will be stalled that much further. During our recent manic economy, over the past decade, consumer spending was responsible for about 70% of the GDP.
I say to all my readers, let others spend -- YOU KEEP SAVING -- and reducing debt. You will be glad you did. The consumer led economy was a false economy. The world is mourning the sudden death of Michael Jackson who passed away yesterday from yet to be determined causes leading to cardiac arrest, reportedly $400 million in debt. You think he was under any stress?!
Continue reading Consumers: Income & savings up -- Gov't worried
Posted Mar 2nd 2009 2:20PM by Beth Gaston Moon (RSS feed)
Filed under: Good news, Economic Data, Personal Finance, Recession
Here's a silver lining to that dark cloud some folks are calling the worst economic environment since the Great Depression: the savings rate is up.
Nervous about the other shoe dropping, Americans are stashing away extra funds for a rainy day. In large part, cash collected from bonus payments, cost-of-living raises, or holiday gifts were saved rather than spent in January,
lifting the personal savings rate to its highest since March 1995, at 5.0%. Just last year, the personal savings rate was hovering at an unimpressive 0.1%. From the 1950s through the early 1980s, however, the savings rate was closer to 10%. Viewed on an annual basis, the personal savings rate hit a new record of $545.5 billion.
Continue reading Savings rate hits 14-year high
Posted Jan 27th 2009 3:00PM by Joseph Lazzaro (RSS feed)
Filed under: International Markets, Forecasts, Consumer Experience
Globalization is, at most, two decades old and few would deny its benefits, which include: the transfer of production to lower-cost centers, an increase in trade and interconnectedness between nations, and the more-efficient deployment of resources.
But while the bulk of globalization research has focused on commerce and production changes and trends, the new world economy may also have ushered in another pattern that could be just as telling regarding national and regional economy GDPs: the era of the frugal consumer.
Has there been a consumption 'shift'?
Moreover, who better to ask about the above than economist David H. Wang, a macroeconomic modeler with more than 100 variables in his research arsenal.
Continue reading Have the U.S., world economies entered the frugal consumer era?
Posted Jan 2nd 2009 1:19PM by Jonathan Berr (RSS feed)
Filed under: Personal Finance
Frustrated with poor returns from the stock market, investors are increasingly turning to a conventional strategy that can promise security at 0 percent interest rates. I am talking about piggy banks.
According to Reuters, sales of the novelty banks are rising as the economy continues to worsen. Exact figures are hard to come by but several retailers report rising demand.
Piggy Bank World.com reported a strong holiday season, according to Michael Gehi, one of the owners. Companies are also increasingly using the banks for promotions.
Though my wife and I don't own a piggy bank, we have taken our loose change to Commerce Bank (now owned by
TD Bank (NYSE:
TD), which for years has counted people's spare change for free in a nifty computerized machine.
Continue reading A bright side of the recession: Piggy bank sales are rising
Posted Dec 2nd 2008 1:20PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Recession, Financial Crisis
A journalism professor of yours truly, Jon Sandberg, who also served in key positions for several Connecticut governors, had an interesting technique that he frequently deployed in seminars. A student would pose a question and Sandberg would say, "That's a good question. Is it acceptable and ethical to publish information that you know would show ethical and other lapses by the current president, if you know that information would also harm innocent individuals?
That's a good question."Then Sandberg would grab his cup of coffee and walk to the window side of the classroom, and stare out the window, sipping his coffee, saying nothing, for an eternity. Eventually, a student or two would begin the discussion.
What's a good question for today? Maybe this: where have all the consumers gone
in the U.S. economy? BloggingStocks had a chance to grill economist Peter Dawson on the matter, and he has a few theories.
The first concerns
structural and technological factors, he said. The U.S. is in the midst of adjusting to globalization, which, as most investors know, has resulted in the transfer of millions of good-paying U.S. jobs overseas to lower-cost centers. "The U.S. has also gained some jobs from globalization, but the net is still a major loss of good-paying jobs in the United States," Dawson said. "Some economists argue that's at the root of declining consumption. We are net-negative in the good-paying jobs category, so far, in globalization, and there simply aren't enough citizens with incomes adequate to buy the products."
Continue reading Where have all the consumers gone?
Posted Nov 4th 2008 10:58AM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Politics, Recession, Financial Crisis
New York Times (NYSE:
NYT) columnist and Nobel Prize-winning economist
Paul Krugman argues that the recent statistics on consumer spending offer disappointing news for those who believe U.S. economic growth will resume via spontaneous generation.
Growth,
Krugman argues, will not magically appear and the consumer pull-back provides testimony: real consumer spending fell at an annual rate of 3.1% in Q3, with major declines in durable goods purchases.
Further, as Krugman notes, the last time consumer spending fell as sharply was 1980, when the economy was enduring a severe recession with double-digit inflation.
Foreboding consumer spendingConsumers are in pull-back mode, Krugman states, and that fact, combined with general economic slowness - - U.S. GDP contracted in Q3 by 0.3% - - and the lending constraints stemming from the credit crunch, creates a climate that's not for the squeamish: consumers are belt-tightening for justifiable reasons, individually, but their collective belt-tightening could lead to a disaster - - a deeper recession.
That's because, as
economist John Maynard Keynes taught, a savings rate is required for a productive, healthy economy, but if every citizen saved everything he/she could all the time, it would be a disaster.
Continue reading NYT's Krugman: A fiscal stimulus dollar in time could save nine
Posted Sep 4th 2008 2:02PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Economic Data, Politics, Presidential Elections, Housing, Recession
With a home near
the capital of the world, decades ago the parents of yours truly were able to locate and purchase the best and most effective books for their children during their grade school development years.
Dad usually chose books that emphasized cognitive development, while Mom emphasized books and exercises that stimulated creativity, and that had happy endings.
To be sure, Morgan Stanley economist
Stephen Roach's macroeconomic reports would not have met Mom's requirement for happy endings.
Roach's post-bubble worldRoach, who now also serves as
Morgan Stanley's (NYSE:
MS) Asia Chairman, takes the pulse of the U.S. and global economies, the housing slump, the credit crisis, and the financial system, in his most recent report. (
pdf)
And, consistent with Roach's reputation for sobering analysis, his economic forecast for the quarters and years ahead is not pleasant, and it differs markedly from the current consensus in financial circles.
That current consensus argues that the U.S. Federal Reserve's recently-established liquidity facilities, combined with the U.S. Treasury's back-up measures, will enable banks and others with bad mortgages and bad mortgage-backed bonds to muddle-through, slowly working-off these debts as revenues increase as the U.S. economy recovers. Likewise, the U.S. housing sector and consumer demand also will recover, as home prices stabilize and consumption returns to more-normal levels as U.S. GDP increases. It's a sort of 'end to the banking and housing crises by a growing U.S. economy better-able to service those bad debts' argument.
Continue reading Which candidate, Obama or McCain, will favor $500 billion in fiscal stimulus, if needed?
Posted Feb 26th 2008 2:22PM by Joseph Lazzaro (RSS feed)
Filed under: International Markets, Commodities, Oil
The financial sector, like the politic arena, can sometimes yield more heat than light, particularly during doldrums or other challenging economic periods. In economist Glen Langan's view, there's no better example of this than the current idea in financial circles that with a period of higher inflation likely ahead, commodities will become the world's new
reserve currencies, displacing the U.S. dollar.
Commodities fascination
"Commodities are not reserve currencies, and never will be," Langan said. "Historically, the most precious, widely-traded metal, gold, has served as an inflation hedge, but even that has been cyclical, with major, long down-periods for the metal."
Langan recognizes that emerging market growth, particularly in Asia and Latin America, has created a long-term bull market in oil, commodities, and raw materials, and these are likely to outperform both inflation and selected investment classes, short-term, but to equate them as the new 'reserve currency' is an argument with little empirical support.
Continue reading Can commodities serve as a reserve currency?
Posted Feb 5th 2008 5:00PM by Joseph Lazzaro (RSS feed)
Filed under: Consumer Experience, Economic Data
American consumers, the pivotal factor in the consumer-dependent U.S. economy, may have modified their spending philosophy,
The New York Times reported Tuesday.
Stung by the housing market correction, stagnant wage growth in certain job segments, above-average debt levels, and a slowing economy, Americans are saving more and using credit less -- a shift that some analysts argue is a cultural inflection point of sorts, with huge implications for the economy.
Economist Steve Affinito told BloggingStocks Tuesday that while The Times' interpretative report did not "cite a large enough sample size to meet my fancy," it nonetheless provided data points that support what macroeconomic indicators are saying about consumer choices.
"We know that the savings rate has increased in the last six months, and retail sales are sluggish, at best. Take these and combine them with much tighter credit terms for home equity loans and other credit and what you get is a pull back in purchases, particularly purchases on credit," Affinito said.
Continue reading Are U.S. consumers moving away from buying on credit?
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