This article on the Arizona Republic website talks about the latest Commerce Department report on Personal Income and Outlays (PDF). Apparently American’s savings have hit the lowest level since the Depression. According to the report:
Personal saving — DPI less personal outlays — was a negative $67.4 billion in December,
compared with a negative $21.6 billion in November. Personal saving as a percentage of disposable
personal income was a negative 0.7 percent in December, compared with a negative 0.2 percent in
November. Negative personal saving reflects personal outlays that exceed disposable personal
income. Saving from current income may be near zero or negative when outlays are financed by
borrowing (including borrowing financed through credit cards or home equity loans), by selling
investments or other assets, or by using savings from previous periods. For more information, see
the FAQs on â€œPersonal Savingâ€ on BEAâ€™s Web site.
One thing I’m not certain on is whether or not 401(k) contributions are counted as “savings.” I haven’t been able to find a definite answer to that. Anyhow, this is not good news. We as a nation have got to do a better job of taking care of ourselves.