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Negative savings rate?
I keep hearing this negative spin on how America has a negative savings rate. But I don't believe investments are included in this number. You could say that I personally have a negative savings rate because I don't have a savings account, but is it really a negative savings if you put your hard earned money into investments rather than a savings account...and let the bank make money on investments? And I think a lot of Americans think like me, so why do we get such a bad reputation for investing rather than saving?
PS...should a rainy day come I can still liquidate some my investments and because I invest in myself, chances are getting slimer that I will have that rainy day....is this a bad thing? Why the bad reputation?
Thanks Stocker as that did help me understand better, but I still get the feeling that it is still not a very good indicator in todays economy. Two examples I believe could contribute to this negative rate; 1) My corp. paid for most of my living expenses and therefor I didn't make much income. And I borrowed $ by using margin in my investment account. 2)Grandpa, who bought his home for 50k yrs ago, took out an equity loan on his, now valued 500K home, in order to a)start a new business b)invest in stocks of which he is also considered borrowing because he's using margin. Did we just contribute to that negative savings rate? And again, especially since the recessive economy in 2001, I believe many Americans have started their own business, doing pretty much what Grandpa and I have done. I do understand many incur debts buying clothes, cars etc, but not to the extent the neg savings rate suggests.
2 Answers
- 1 decade agoFavorite Answer
The Federal Reserve Board does take into consideration investing as savings. What it looks at, in simple terms, is whether consumers are spending more than they earn or less than they earn. If they spend less than they earn, then the balance is either going into bank accounts or investments. However, currently on average, consumers are spending more than they earn.
Here is an article about negative savings:
- ?Lv 45 years ago
i think of it is because of the fact of costly well being care expenses, costly college coaching and the undeniable fact that wages are actually not preserving up with the extreme fee of inflation. I propose have you ever long gone to the food market recently and seen the fee of nutrition at present? I propose the freakin bread is $2.50 basically at Wal Mart on my own! That provides up--maximum suitable alongside with different grocery products- on the money register. Yep...issues are fairly costly at present. i think of it is why why individuals have a adverse fee reductions fee. additionally, the U.S. government is at present in the crimson. We additionally don't be attentive to if SS would be right here whilst the technology x will become sixty 5.
