Good to have the General back in the picture.
About that flood: do you figure the analogy can be extended?
Now that we are in new territory and we no longer have to mow the grass, opportunities abound.
Fishing anyone? Snorkling maybe? Gondola tours of those less fortunate not to have gondolas?
Irony is the stuff on the bottom of the cheap boat to keep it from going upside down...and then down, no? Sarcasm is the stuff that sinks it straight off with the concrete sign :"for sale".
Ok, I do have nothing to say.
Witless again.
401 K is included in the "income". so negative savings mean that 401 k money has already been spent. in other words, if 401 k is "assumed" as parked away money, then savings would have to be negative by that much more...CR/others may shed light upon that ...
Matt, as Sam pointed out, employee 401K contributions are included in compensation, as are employer's contributions to 401 K plans or pension plans (under supplements to wages).
BTW, the BEA releases the October numbers tomorrow.
Best Wishes.
If some event(s) (such as increased interest rates, higher heating costs, devalued dollar) trigger a rapid drop in real estate prices in "hot" markets like CA and FL, what is the economic prognosis?
If you have answered this in some detail in previous posts, please could you provide links?
of course the story can be reversed, if 4% growth between 1985 and 2005 has been made possible only through a falling saving rate od about half a point a year. Then what will be future US growth, when the saving rates makes it way up to the 10% ?
Any idea anybody ?
Let's say the falling saving rates explains all the US-Euro difference in growth rate, it accounts for 2% of annual growth.
THere you have it, the US "dissaved" 2% of growth annualy, actually they borrowed over the last 20 years some 40% of economic growth (ball park maths please forgive me).
So here we are in the next 20 years, the US will need to bring back the rate to the normal 10% level and it will cost him 4pt of growth for every rise of 1 pt in the personal saving rate. Those could be 20 years with 0% growth.
Of course if for some reason foreign lenders panic, and in turn national lenders and a credit crunch follows, then may be the USA won't have 20 years to bring back the rate to 10%. May be they 'll have to raise it in panic in less than 5 years and taste a dire economic depression.
Of course all this assuming that the saving rate "needs" to come back to its longterm level (may be I'm wrong it's a new era) and assuming its fall as somehow fueld the economy (NOOOOo I must be kidding)
I've been wondering about the personal savings issue, too. On the one hand, it seems to me that people really need to save more for their own retirements; but on the other hand, since 70% of our economy depends on consumer spending, what happens if people really do start to save instead of spend?
As far as 401(k) accounts go, C. Eugene Steurle of the Urban Institute/National Tax Policy Center says that because people are rewarded for making deposits, but not for actually keeping the money, they tend to fund the accounts with one hand and borrow the money right back out (either directly, or by borrowing against it) with the other hand.
Time magazine reported last month that the average 401(k) account holds about $60,000, and the median amount in 401(k)s is about $18,000. They didn't say what length of time the average account has been being funded for, but these figures don't seem to me to demonstrate that people are making any real effort to save money through these vehicles.
I agree on the lousy showing for 401(k) if the stats are right. That is not serious saving for retirement, by any means. I don't think any of the programs operated through the tax system have been helpful to increasing US savings rates. All they have done is reduce the tax base for the Treasury.
If you want people to save, help them earn more income. Teach them that scraping together savings is a good thing, instead of telling them to go shopping.
UK consumer confidence declined sharply today. It is the lowest its has been since the survey begun in 1983. The US economy is likely headed the same path as Australia and the UK.
The ones with a solid pension, like government employees, actually don't need to save anything. They will do better than most of us. The bottom half of the income distribution doesn't save anything. They rely almost totally on Social Security, supplemented with part-time work. The rest will have to work until they can't. Good news for Social Security.
There was a book a few years ago 'What if the boomers can't save for retirement'. The conclusion was that while a person can save for retirement, a society can't, as most of what is consumed must be produced as needed. Investment as a timeshifting of consumption is very limited for a society. We will all have to work longer or live with reduced standards of living in retirement.
Lordy, lordy, you don't really think that those thieving overbenefited govt. and educat. pensions ...are going to be paid do you? Nor are the Medicare benies and pharmas promised!
Those were thieving deals made by __ ___politicos wanting to get re-elected each time, govt. unions, and govt. management asses...advised by all those investment advisers cons who profited from fees all the way --by each level of government.
Pension and retirement fiscal emergencies should have been declared at least 12 years ago and sliced, sliced, sliced away.
About $600B in public and another $400+ in private underfunded( which haven't been jettisoned by
corp bankruptcy game yet).
Good to have the General back in the picture.
About that flood: do you figure the analogy can be extended?
Now that we are in new territory and we no longer have to mow the grass, opportunities abound.
Fishing anyone? Snorkling maybe? Gondola tours of those less fortunate not to have gondolas?
Irony is the stuff on the bottom of the cheap boat to keep it from going upside down...and then down, no? Sarcasm is the stuff that sinks it straight off with the concrete sign :"for sale".
Ok, I do have nothing to say.
Witless again.
Isn't the saving rate under representative because they do not include 401K contributions?
401 K is included in the "income". so negative savings mean that 401 k money has already been spent. in other words, if 401 k is "assumed" as parked away money, then savings would have to be negative by that much more...CR/others may shed light upon that ...
Matt, as Sam pointed out, employee 401K contributions are included in compensation, as are employer's contributions to 401 K plans or pension plans (under supplements to wages).
BTW, the BEA releases the October numbers tomorrow.
Best Wishes.
SAM: One problem is that the parking lot is unguarded.
Dear Calculated Risk,
If some event(s) (such as increased interest rates, higher heating costs, devalued dollar) trigger a rapid drop in real estate prices in "hot" markets like CA and FL, what is the economic prognosis?
If you have answered this in some detail in previous posts, please could you provide links?
Thank you very much.
of course the story can be reversed, if 4% growth between 1985 and 2005 has been made possible only through a falling saving rate od about half a point a year. Then what will be future US growth, when the saving rates makes it way up to the 10% ?
Any idea anybody ?
Let's say the falling saving rates explains all the US-Euro difference in growth rate, it accounts for 2% of annual growth.
THere you have it, the US "dissaved" 2% of growth annualy, actually they borrowed over the last 20 years some 40% of economic growth (ball park maths please forgive me).
So here we are in the next 20 years, the US will need to bring back the rate to the normal 10% level and it will cost him 4pt of growth for every rise of 1 pt in the personal saving rate. Those could be 20 years with 0% growth.
Of course if for some reason foreign lenders panic, and in turn national lenders and a credit crunch follows, then may be the USA won't have 20 years to bring back the rate to 10%. May be they 'll have to raise it in panic in less than 5 years and taste a dire economic depression.
Of course all this assuming that the saving rate "needs" to come back to its longterm level (may be I'm wrong it's a new era) and assuming its fall as somehow fueld the economy (NOOOOo I must be kidding)
Name, here is a post from Angry Bear: After the Housing Boom: Impact on the Economy
I will be returning to the subject soon.
Best Wishes.
I've been wondering about the personal savings issue, too. On the one hand, it seems to me that people really need to save more for their own retirements; but on the other hand, since 70% of our economy depends on consumer spending, what happens if people really do start to save instead of spend?
As far as 401(k) accounts go, C. Eugene Steurle of the Urban Institute/National Tax Policy Center says that because people are rewarded for making deposits, but not for actually keeping the money, they tend to fund the accounts with one hand and borrow the money right back out (either directly, or by borrowing against it) with the other hand.
Time magazine reported last month that the average 401(k) account holds about $60,000, and the median amount in 401(k)s is about $18,000. They didn't say what length of time the average account has been being funded for, but these figures don't seem to me to demonstrate that people are making any real effort to save money through these vehicles.
I agree on the lousy showing for 401(k) if the stats are right. That is not serious saving for retirement, by any means. I don't think any of the programs operated through the tax system have been helpful to increasing US savings rates. All they have done is reduce the tax base for the Treasury.
If you want people to save, help them earn more income. Teach them that scraping together savings is a good thing, instead of telling them to go shopping.
UK consumer confidence declined sharply today. It is the lowest its has been since the survey begun in 1983. The US economy is likely headed the same path as Australia and the UK.
The ones with a solid pension, like government employees, actually don't need to save anything. They will do better than most of us. The bottom half of the income distribution doesn't save anything. They rely almost totally on Social Security, supplemented with part-time work. The rest will have to work until they can't. Good news for Social Security.
There was a book a few years ago 'What if the boomers can't save for retirement'. The conclusion was that while a person can save for retirement, a society can't, as most of what is consumed must be produced as needed. Investment as a timeshifting of consumption is very limited for a society. We will all have to work longer or live with reduced standards of living in retirement.
Lordy, lordy, you don't really think that those thieving overbenefited govt. and educat. pensions ...are going to be paid do you? Nor are the Medicare benies and pharmas promised!
Those were thieving deals made by __ ___politicos wanting to get re-elected each time, govt. unions, and govt. management asses...advised by all those investment advisers cons who profited from fees all the way --by each level of government.
Pension and retirement fiscal emergencies should have been declared at least 12 years ago and sliced, sliced, sliced away.
About $600B in public and another $400+ in private underfunded( which haven't been jettisoned by
corp bankruptcy game yet).
Post Scrpit: This is just more of the mess mess the Boomers have dumped on this country. (with more added from their spoiled offspring).
Lordy, lordy, you don't really think that those thieving overbenefited govt. and educat. pensions ...are going to be paid do you?
This is the one thing you can be assured of. Who do you think controls the pursestrings? The rest of us won't be nearly so lucky.