Those that save and those that don't / by kevin murray

There are all sorts of news and media outlets, that talk about how America has recovered from its deep recession and now is basically considered to be at full employment, of which, if you believe those headlines, all serves to give the impression that all is well; but, in reality, for a huge subset of Americans, this isn't true at all; of which, a careful look at the personal savings in the United States, as shown by, indicates that in 2012 the cumulative amount of savings for Americans was 1,174.6 billion dollars, which was a massive increase from just 295.4 billion dollars in 2007; however, 2012 was far and away the peak of personal savings, and as of 2017, the personal savings has since precipitously declined to 384.4 billion dollars, of which, in theory, the economy in America, has been in an expansionary phase. This plummeting savings rate is echoed by, which shows that in December of 2012, the personal savings rate was an extremely impressive 11.0%, whereas in April of 2018, it had dropped to just 2.8%.


The upshot of this steep decline in savings, clearly indicates that those that have had money saved up, have had to spend more money than they have accumulated over the last few years, just to stay afloat, indicating that their expenditures have not kept up with their wage growth, if any; as well as suffering from the effects of inflation, of which the real inflation rate is probably understated by governmental agencies.  Additionally, the Federal Reserve Bank is in the process of normalizing interest rates, which means that they are increasing the interest rate charged for those that borrow money, from an extremely low rate, to a meaningful higher rate, so that, all those consumers that borrow money for their mortgages, car loans, student loans, credit cards, and so forth, are susceptible to higher interest rate charges, either now, or in the foreseeable future.


So that, the long and short of it is that those that find it problematic to get by when interest rates were so low, when inflation was quiescent, when gasoline prices were lower, all while being gainfully employed, yet, do not have the ready means to draw upon their savings, because they don't actually have any savings to draw upon, but instead must borrow money through the usage of their credit cards; then the economy of America is heading straight towards some very troubling waters, for the economy, to a great extent, is driven by domestic spending, and when the actual spenders are tapped, then a recession has to be right around the corner.    


All of the above, clearly indicates, that this economic recovery in America, has been a recovery that has skewered to the very people that had all the benefits and money to begin with, and hardly much of anything has come the way of those that are laboring hard just to make an honest living; of which, it is these folk, the salt and earth of what make America great, that are now suffering, and will have to suffer in the main, the ill effects of an economy that is heading towards a standstill, leaving them high and dry, broke, and in crippling debt.