Americans have learned a hard lesson in this recession and are trying to save more money. And economists are watching closely to see if that behavior changes after the recession lifts. Will penny-pinching become a permanent mind-set? [via msn] Some economists expect it will, because it's highly unlikely that the world will go back to the way it was, according to The New York Times. Retirement accounts have taken a huge hit. Easy mortgages are gone. Home values and net worth have evaporated.
Lives have been permanently changed in the past year. And so even if the economy recovers, some Americans will have no other choice but to keep pinching pennies. The savings rate has risen from zero to more than 4% in the past year.
That could create new problems for the U.S. economy, which is extremely dependent on consumer spending, the Times reports. About 70% of the nation's gross domestic product is tied to consumer spending.
We are not a nation of savers. Americans generally spend more money than, say, people in China, where the savings rate is generally about 25%.
The U.S. saved the most in the 1970s, when the savings rate surpassed 14%, according to the Times. But in 2005, the savings rate went to negative 2.7% -- which meant Americans spent more than they made. And that never ends well.
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